BMO analysts said on Tsy debt......>

US TSYS/RESEARCH: BMO analysts said on Tsy debt ceiling issue that they've

received "several 'what-if' questions", the "most common of which has been, 'Who

doesn't get paid first, if the limit isn't raised in time?' The short answer is

everyone, unless there is prioritization. For context, while we don't expect the

government will default or miss any payments, it is still interesting to

consider how much 'extra' room there might be for politicians to delay." 

- They add Tsy Secy Mnuchin "is on record as saying that debt prioritization

(i.e. servicing Treasury debt, Social Security, and the military before paying

other expenses such as federal employees) is not an option, but Moody's chimed

in" Thursday "and noted, just in case, that 'prioritization would not affect our

sovereign rating. It's obviously not an ideal thing, but our rating speaks to

the risk of default or loss on government debt. If there were some non-debt

obligations paid later than they otherwise would, that's not the same thing.'

While there might be disagreement amongst the major bond raters, our biggest

takeaway from the comments from Moody's was that focus on this issue isn't

limited to bill investors as the market prepares for an eventful fall."