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Thread: Was our commitment to pay our debts causing our Moodys rating to remain at Junk?

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    Default Was our commitment to pay our debts causing our Moodys rating to remain at Junk?

    Interesting that for the last several years the Sinn Féin viewpoint has been that committing to repay the bank debt has been the cause of poor ratings, as opposed to the FF/FG view that we had to pay our debts and be seen to pay our debts.

    Noonan has now come out with a statement that he expects our Moodys rating to RISE because we have managed to push back the repayment dates on some debt by seven years.

    In other words, the less we honour our debt commitments, and the more sustainable our proposed debt repayments the higher our rating will be. Some of us were saying that years ago when we said the government should have a structured default, and drop this ridiculous juvenile nonsense about paying all our debts, when it was obvious that they had gone above sustainable levels.

    Are the government slowly realising that Sinn Féin was right, and starting to turn the ship?

    Is/was it our commitment to repay in full our debt the reason for our Junk status on Moodys?


    D

    Edit. "fall" to "Rise". Nothing worse than having Sync, of all people on this site pointing out your error.
    Last edited by DuineEile; 14th April 2013 at 03:04 AM.

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    Politics.ie Member Frank Galton's Avatar
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    Yesterday's deal pushes out the repayment terms on official debt (i.e. that owed to our "partners") and not market debt. So it is not any kind of default but rather a consensus restructuring of official debt. We're still committed to pay all our debt to the last cent. But it's a fair point that the markets and agencies seem to reward moves towards more sustainable debt, which begs the question of how you make debt more sustainable. For the time being, the assumption is that it can be done by concessions on the official debt. But is 120 percent debt to GDP really sustainable? (that's the level that the Eurozone currently seems to be assuming for all the bailout patients)
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    Politics.ie Member Sync's Avatar
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    Quote Originally Posted by DuineEile View Post
    In other words, the less we honour our debt commitments, and the more sustainable our proposed debt repayments the higher our rating will be.
    1. This is specious logic.

    "Lisa I want to buy your rock"...



    Moody’s Investors Service downgraded Argentina’s foreign bonds to seven levels below investment grade, as a U.S. court case with holdout creditors increases the chances the country will default.
    The rating on government securities under foreign legislation was cut to Caa1 from B3 while the rating on the country’s local law bonds were affirmed at B3, Moody’s said in an e-mailed statement today. The outlook on both ratings is negative. The Caa1 rating is in line with Cuba, Ecuador and Pakistan.
    2. Noonan has said he expects out rating to RISE.

    Repayments deal should lead to Moody

    Minister for Finance Michael Noonan said today that the postponement of Ireland’s bailout repayments was but one of several positive developments which will ultimately lead credit rating agency Moody’s to upgrade its assessment of Irish debt.
    This is why we tell people to use links and quotes in their OP.

    3. You can commit to whatever you want, that doesn't mean people will believe you. Moodys (And lots of other people, yourself included I'd wager) didn't believe the commitment could be met in the original timeframe. The revised timeframe may be more manageable and thus viewed as more achievable by agencies/investors etc.
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    Quote Originally Posted by Sync View Post
    1. This is specious logic.

    "Lisa I want to buy your rock"...





    2. Noonan has said he expects out rating to RISE.

    Repayments deal should lead to Moody



    This is why we tell people to use links and quotes in their OP.

    3. You can commit to whatever you want, that doesn't mean people will believe you. Moodys (And lots of other people, yourself included I'd wager) didn't believe the commitment could be met in the original timeframe. The revised timeframe may be more manageable and thus viewed as more achievable by agencies/investors etc.


    1. i.e. the ratings are based on likelihood of repayment of FUTURE DEBT (i.e a guide to potential investors).

    2. Which is my point. Our repayments are reduced, so our debt is more sustainable, so our ratings RISE. These ratings are about our capacity to repay FUTURE LOANS.

    3. Which is my point precisely, just restated. Why didn't you just say "I agree"? It would have been simpler.



    D

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    Politics.ie Member Crazy horse 6's Avatar
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    SF have been right from since 2008.

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    Politics.ie Member Sync's Avatar
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    Oy...

    Quote Originally Posted by DuineEile View Post
    1. i.e. the ratings are based on likelihood of repayment of FUTURE DEBT (i.e a guide to potential investors).
    You state:
    In other words, the less we honour our debt commitments, and the more sustainable our proposed debt repayments the higher our rating will be
    This is specious reasoning based on an utterly faulty understanding of the situation. We are honouring our debt commitments. We have revised the timeline in agreement with our creditors. I've provided an example of a country who has defaulted in the past and expected to default again. They are ranked lower than us.

    2. Which is my point. Our repayments are reduced, so our debt is more sustainable, so our ratings RISE. These ratings are about our capacity to repay FUTURE LOANS.
    You stated that Noonan expects our rating to fall. He doesn't. He said it would increase. I gave you the link. And the quote. Did you read the link and the quote?

    3. Which is my point precisely, just restated. Why didn't you just say "I agree"? It would have been simpler.D
    Again, your point seems to be that our rating would improve if we defaulted. You have provided no basis to support that. Noonan believes that our rating will increase because the agency finds it more believable now that we will repay all the money we've agreed to.

    Given that you haven't read or understand Noonan's statement do you see why you don't really much credibility?
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Politics.ie Member friendlyfire's Avatar
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    Junk status.....up we go to the triple/gold plated top of the class cowboys!
    Stupidity is far more fascinating than intelligence, after all intelligence has it's limits.

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    Quote Originally Posted by Sync View Post
    Oy...



    You state:


    This is specious reasoning based on an utterly faulty understanding of the situation. We are honouring our debt commitments. We have revised the timeline in agreement with our creditors. I've provided an example of a country who has defaulted in the past and expected to default again. They are ranked lower than us. NOT BECAUSE THEY HAVE DEFAULTED, THOUGH.



    You stated that Noonan expects our rating to fall. He doesn't. He said it would increase. I gave you the link. And the quote. Did you read the link and the quote? MY BAD, I MEANT RISE, AS SHOULD HAVE BEEN OBVIOUS, FROM THE REST OF THE POST.



    Again, your point seems to be that our rating would improve if we defaulted. You have provided no basis to support that. Noonan believes that our rating will increase because the agency finds it more believable now that we will repay all the money we've agreed to. NOONAN BELIEVES THIS BECAUSE HE KNOWS THAT THE RATINGS AGENCIES ARE CONCERNED WITH OUR ABILITY TO PAY FUTURE INVESTORS. THE LESS WE HAVE TO PAY EXISTING CREDITORS, THE MORE MONEY WE HAVE TO PSY FUTURE INVESTORS.

    Given that you haven't read or understand Noonan's statement do you see why you don't really much credibility? STOP HECTORING, IT DOESN'T SUIT YOUR IQ. NOONAN'S STATEMENT IS NOT AVAILABLE YET ON THE DEPT. OF FINANCE WEBSITE. YOU DON'T HAVE IT, BECAUSE IF YOU DID YOU WOULD HAVE POSTED A LINK TO IT, NOT A LINK TO THE IRISH TIMES REPORT OF WHAT HE SAID. THAT REPORT DOES NOT DIFFER FROM WHAT I SAID. YOU SEEM TO BE LOOKING FIR A FIGHT, JUST FOR THE SAKE OF ONE. I COULDN'T BE BOTHERED WITH NONSENSE LIKE THAT AT THE MOMENT

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    Politics.ie Member Sync's Avatar
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    I'm not hectoring you, but you keep saying things which you utterly fail to back up, because they can't be backed up.

    http://www.fitchratings.com/.../rati...gs_history.xls Let's look at history using Argentina as an example. I'll use Fitch because they've got this handy dandy history sheet, but they and Moody's pretty much track each other.

    Argentina in 1997-Nov 2001 - Not great, ratings between consistently in the Non-investment grade area.

    Then they threaten to default and drop to "Default imminent with little prospect for recovery" level.

    Then they default in Dec 2001 and crater to D-DDD for 4 years.

    Then they get moved up 4 years later to be marked as RD, which means they've defaulted by are meeting other obligations.

    But now they start making noises again about defaulting, so they drop to B and then CC in Jan of this year.

    So as you can see through actual numbers using actual history of a defaulting nation, their rating dropped specifically because they defaulted.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Quote Originally Posted by Sync View Post
    I'm not hectoring you, but you keep saying things which you utterly fail to back up, because they can't be backed up.

    http://www.fitchratings.com/.../rati...gs_history.xls Let's look at history using Argentina as an example. I'll use Fitch because they've got this handy dandy history sheet, but they and Moody's pretty much track each other.

    Argentina in 1997-Nov 2001 - Not great, ratings between consistently in the Non-investment grade area.

    Then they threaten to default and drop to "Default imminent with little prospect for recovery" level.

    Then they default in Dec 2001 and crater to D-DDD for 4 years.

    Then they get moved up 4 years later to be marked as RD, which means they've defaulted by are meeting other obligations.

    But now they start making noises again about defaulting, so they drop to B and then CC in Jan of this year.

    So as you can see through actual numbers using actual history of a defaulting nation, their rating dropped specifically because they defaulted.

    So if we had defaulted on bank debt in 2008, we would be on the way back provided we met our other commitments?

    I do not think a structured default would be painless, but being decisive in 2008 sure would have been better than the slow strangulation we are going through now. A bad certainty is often better than uncertainty. I know plenty of people who have given up on the country just because they can't see "when will it all end?"


    D

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