Fitch May Cut U.S. to 'Restricted Default'

Fitch Ratings on Wednesday warned it could downgrade the U.S. sovereign ratings to "restricted default" if the government fails to honor Treasury notes and some coupon payments on Treasury securities due on Aug. 15.

The ratings would be raised again after the default is cured, but probably not to the current AAA level, Fitch said in a statement. It added, however, that it believes U.S. lawmakers will ultimately reach an agreement to raise the country's debt ceiling and avoid any default.