Moody's: Budget talks key to U.S. rating outlook (by Mike Maynard)

WASHINGTON (MarketWatch) -- Analysts at Moody's Investors Service would like to see some constructive action taken by the White House and Capitol Hill on the federal debt, saying in a report Tuesday that this would be a key factor in determining whether the agency will change its ratings outlook for U.S. government debt. The rating stands at Aaa with an outlook of "negative." If budget negotiations "lead to specific policies that produce a stabilization and then downward trend" in the ratio of federal debt to gross domestic product in the medium term, Moody's said it would likely reaffirm the Aaa rating and change the outlook to "stable." Moody's also noted that its ratings outlook makes the assumption that Congress and the Obama administration will again agree to increase the U.S. debt limit and do so in a "relatively orderly" manner.