The US's AAA credit rating could be at risk even if it keeps making bond payments but can't meet other obligations

• Credit-rating firms are holding steady in their belief lawmakers will reach a deal to avert a US default.
• In the event of a default, the US could be downgraded even if it prioritizes bond payments.
• Creditworthiness and ability to pay all obligations affects investors' trust in US Treasury markets.

The speed with which federal policymakers reach a debt ceiling deal could be consequential for the US's creditworthiness, and even if a worst-case scenario of a debt default is averted, missing other payment obligations could still harm the country's standing. 

According to Bloomberg, credit rating firms remain optimistic that a deal will be reached. Negotiations to avoid a US default have been ongoing between President Joe Biden and Congressional Republicans, who need to lift the US borrowing limit before June 1, which is when Secretary Janet Yellen has said the government will run out of money to meet all of its obligations.

Despite partisan friction, the two sides have struck a positive tone about the negotiations, indicating that a deal may be in sight. For this reason, Moody Investors Service, Fitch Ratings and S&P Global Ratings — the latter of which downgraded the US following 2011's debt ceiling standoff — are all maintaining their steady outlook.

But with time running short, a default still remains on the table. Previously in March, Republicans had offered the idea of avoiding the crisis by "prioritizing debt," or paying off certain obligations ahead of others. For instance, the government could keep making payments on bonds while skipping payments to some contractors. 

If this were to happen, Fitch has indicated that the US would be downgraded from its AAA status. Yellen has also spoken against this strategy, calling it a "default by another name."

Meanwhile, Moody's said it may bring the government's credit down to Aa1 if an interest payment on a bond is delayed, which is possible if the Treasury runs out of funds. 

The US's creditworthiness is central to the risk-free reputation of the country's Treasury market — even the threat of a downgrade could send investors fleeing debt tied to the world's largest economy.  

Further delays on a debt ceiling resolution could do more than harm US credit. According to Goldman Sachs, even if a default is avoided, liquidity could be drained as markets help restore the Treasury Department's cash balance. As of last week, the Treasury General Account had $60.6 billion, a significant drop from the previous week's $114 billion.