Moody’s warns Ireland of another downgrade

Moody’s warned on Tuesday that it may cut Ireland’s credit rating again, pointing to the huge bill for cleaning up its banks announced last week, a weak economic recovery and rising borrowing costs. Skip related content

As well as the bank bill, Moody’s said poor recent data shoed a cloudy outlook for the recovery of domestic demand and pointed to the sharp rise in Irish bond yields since its last rating action in July.

“Ireland’s ability to preserve government financial strength faces increased uncertainty as a result of (these) three main drivers, which together would further increase its debt and aggravate its debt affordability,” Dietmar Hornung, Moody’s lead sovereign analyst for Ireland, said in a statement.

Moody’s said that if it decides to downgrade Ireland’s Aa2 rating it would likely most likely be by one notch. The agency’s last one-notch cut was on July 19 although it also slashed its ratings on the lower-grade debt of bailed-out bank Anglo Irish last month.

Its evaluation of Ireland is still one step higher than those of the other main agencies — Fitch and Standard & Poor’s.
Source: Reuters