Moody’s Downgrades Ireland

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.

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…..