Moody's Downgrades Ireland

December 17th, 2010
in Background

Brussels (NY Times):  Moody’s Investors Service cut Ireland’s credit rating by five notches to Baa1, with a negative outlook, from Aa2 and said further downgrades could follow.  Baa1 is just two grades above junk.

Follow up:

Moody's was apparently not impressed by European Union leaders pledging Thursday to do “whatever is required” to contain the debt crisis and defend their embattled currency.  In the draft of a closing statement, the leaders welcomed the “impressive progress” in Dublin toward meeting the stiff conditions set for its recent bailout, including adoption of steep budget cuts.

The downgrade represented a further blow for a county that has enacted deep austerity cuts — and it is likely to raise questions about whether the rating agencies are exacerbating the efforts of struggling euro countries to emerge from the crisis.  “In a way the ratings agencies are just playing catch-up with investor perceptions,” said Robin Marshall, director of investment at Smith & Williamson in London. “But it doesn’t help the downward spiral of debt.”  Read more.....  

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