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Thread: Moody's Warns on another Ireland Downgrade

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    Default Moody's Warns on another Ireland Downgrade

    The rating agency Moody's has highlighted the continuing implosion of the banking system as a major factor in another reduction of a notch from the current Aa2 level.

    Another corner turned

    Moody's Investors Service said Tuesday it may cut Ireland's debt rating again, citing the increased cost to the government of repairing the stricken banking system, weak economic growth and rising borrowing costs.

    Last week, the Central Bank of Ireland said it would cost the government €50 billion ($68.45 billion) in total to bail out the banks, which have suffered big losses as a result of property loans.

    The government acknowledged that would push its budget deficit up to 32% of gross domestic product this year, the highest for any member of the euro zone since the currency was launched in 1999.

    The government said it will in early November outline a new, four-year plan for cutting that deficit. It also cancelled planned bond sales for the rest of this year, citing the high cost of borrowing.

    In July, Moody's cut the Irish government's rating by one notch to Aa2, citing similar concerns. On Tuesday, it said it had placed that rating on review for a possible downgrade.

    "Ireland's ability to preserve government financial strength faces increased uncertainty as a result of three main drivers, which together would further increase its debt and aggravate its debt affordability," said Dietmar Hornung, Moody's lead sovereign analyst for Ireland.

    A Moody's review can take up to three months to complete. Moody's last week cut its rating of the Spanish government after a similar review.
    Moody's Warns on Ireland Rating - WSJ.com
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

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    Politics.ie Member
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    The last Moody's cut was in July. They are still one notch ahead of S&P and Fitch. This is simply Moody's reflecting what has happened since July and bringing themselves into line with S&P and Fitch.

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    The CDS market seems to be taking a benign view of it

    News Headlines

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    Yippee! Are we still a bigger risk than Iraq?
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

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    Politics.ie Member HarshBuzz's Avatar
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    Quote Originally Posted by adrem View Post
    The last Moody's cut was in July. They are still one notch ahead of S&P and Fitch. This is simply Moody's reflecting what has happened since July and bringing themselves into line with S&P and Fitch.
    this is correct, Moodys are just lagging
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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    Politics.ie Member HarshBuzz's Avatar
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    Quote Originally Posted by Cassandra Syndrome View Post
    Yippee! Are we still a bigger risk than Iraq?
    oh yes indeed

    Entity Name Mid Spread CPD (%)
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    Greece 738.83 47.15
    Argentina 754.20 40.48
    Pakistan 606.10 34.53
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    Portugal 408.46 30.09
    Iraq 421.50 26.03
    Dubai/Emirate of 408.41 24.97
    Illinois/State of 285.00 22.72
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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