S&P says U.S. fiscal deal will not affect credit outlook

NEW YORK Thu Jan 3, 2013 3:57am IST

U.S. President Barack Obama delivers remarks next to Vice President Joe Biden (L) after the House of Representatives acted on legislation intended to avoid the ''fiscal cliff,'' at the White House in Washington January 1, 2013. REUTERS/Jonathan Ernst

U.S. President Barack Obama delivers remarks next to Vice President Joe Biden (L) after the House of Representatives acted on legislation intended to avoid the ''fiscal cliff,'' at the White House in Washington January 1, 2013.

Credit: Reuters/Jonathan Ernst

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NEW YORK (Reuters) - The U.S. budget deal won't change Standard & Poor's perspective on the country's credit outlook, the rating agency said Wednesday, but the risk of another recession in the world's biggest economy has eased.

The budget compromise "doesn't affect our view of the country's credit outlook, given that we believe yesterday's agreement does little to place the U.S.'s medium-term public finances on a more sustainable footing," S&P said in a statement.

The hard-fought fiscal measures helped avert the so-called fiscal cliff of potentially devastating tax hikes and spending cuts. But more work remains for policymakers, S&P added.

Given the deal, however, "we've reduced our assessment of the risk of another recession in the next 12 months to 10 percent to 15 percent from 15 percent to 20 percent (with more weight placed on the lower end of the range)," the statement read.

S&P cut the U.S. sovereign rating to AA-plus with a negative outlook in 2011. (Reporting By Pam Niimi and Luciana Lopez)

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