A failure to raise the U.S. borrowing limit would be more damaging to financial markets than a government shutdown, Moody's Investors Service said on Tuesday.
Moody's expects that the United States will avoid a shutdown and increase the debt limit, the rating agency said in a report.
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But failure to lift the cap on what the government can borrow could "theoretically affect all categories of government spending, including debt service."
(Reporting by Luciana Lopez Editing by W Simon)