December 17th, 2010
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.....