US shutdown seen a threat to economy, not rating: Moody’s

WASHINGTON/NEW YORK: The U.S. government shutdown that began on Saturday is disruptive to the economy, but poses no immediate threat to its top notch Aaa rating as long as it makes its debt payments on time, Moody´s Investors Service said on Monday.

The federal shutdown, the first since 2013, would make it likely that the issue of raising the statutory borrowing limit will become part of the next round of budget negotiations in Washington, the rating agency said in a research note."Although the shutdown will be credit negative for the sovereign to the extent that it disrupts the U.S. economy, it will not have any immediate implications for the U.S. government´s credit rating," Moody´s said.

On Friday, Fitch Ratings said a shutdown would not affect its AAA-rating on the United States. Financial markets have brushed off the shutdown. Still, the shutdown stopped federal discretionary spending that represents about 38 percent of non-debt related outlays and includes most day-to-day government operations, according to Moody´s.

It is unclear when the shutdown will end as Republican and Democratic lawmakers have been unable to reach a funding agreement, even a temporary one. Even with the current impasse on government funding, Moody´s expected Congress will raise the debt ceiling before the government is expected to run out of cash in late February or early March after extraordinary measures by the Treasury Department are exhausted.

Meanwhile thousands of federal employees began the week on Monday trying to figure out if they would be working and getting paid, as U.S. Senate leaders tried to reach a deal to reopen the government open hours before a full Senate vote.

At the Portsmouth Naval Shipyard in Kittery, Maine, some 5,300 civilian workers were told to show up on Monday, the third day of the shutdown, regardless of whether they´d been scheduled to work that day, to learn if they would be furloughed.

The 1,800 members of the International Federation of Professional and Technical Engineers who work at the base maintaining nuclear submarines were distressed by the news, said Debbie Jennings, president of the IFPTE Local 4."They don´t know who is going to be furloughed and who is not, or why some and not others," Jennings said in an interview.

"We were just notified that all union officials will be furloughed, which we don´t think is right." Those who were furloughed were being given two to four hours to shut down their work stations, Jennings said.

Pentagon officials said more than half the Defense Department´s civilian workers will be furloughed. A spokeswoman for the Portsmouth Naval Yard did not immediately respond to a request for comment.

The shipyard was just one of thousands of federal operations for which funding ran out at midnight on Friday and was not renewed amid a dispute between U.S. President Donald Trump and other Republicans and Democrats over immigration.

The federal Office of Personnel Management warned on Twitter it may not be able to provide updates on the government´s operating status on its social media accounts due to the shutdown.

"Employees should refer to their home agency for guidance on reporting for duty," it said. "This is incredibly stressful," said Jessica Klement, vice president at the National Active and Retired Federal Employees Association, which represents more than 20,000 workers.

"Essential employees must report to work without knowing when they´ll be paid next," she said. "Non-essential employees will be forced to stay home without pay, not knowing if back pay will be provided."

The Smithsonian Museum said on its website that its District of Columbia museums, research centers and the National Zoo will remain open on Monday using existing funds, but their status beyond then was uncertain.

Environmental Protection Agency Administrator Scott Pruitt instructed all staff to work this week, telling employees in an email over the weekend that the agency has enough resources to remain open for a limited amount of time.

During shutdowns, non-essential government employees are furloughed, or placed on temporary unpaid leave. Those deemed essential, including those in public safety and national security, keep working. The last shutdown in October 2013 lasted more than two weeks, and more than 800,000 federal employees were furloughed.