Moody's warns could cut 5 states tied to U.S. credit

(Reuters) - Texas and nine other states could end up with a higher credit rating than the United States.

That is what Moody's Investors Service on Tuesday said could happen if lawmakers in Washington fumble debt talks so badly the rating agency is forced to cut the U.S. rating to Aa1 from its current triple-A level.

Ten states, including Texas, Missouri and Iowa, are not heavily dependent on federal aid and therefore will keep their triple-A ratings even if the United States is downgraded a notch, the rating agency said.

However, the remaining five states rated Aaa by Moody's -- Maryland, New Mexico, South Carolina, Tennessee and Virginia -- are likely to lose their top rating as their ties to the U.S. government in terms of high federal employment levels or Medicaid exposure put them in jeopardy should the United States' rating be cut to Aa1 or lower, according to the rating agency.....read on