Ireland Joins Portugal and Greece in Moody's 'Junk' Drawer
The ratings agency slashed the Emerald Isle's debt junk status
Moody's knocked Ireland's long-term debt down a notch into "junk" territory on Tuesday, exactly one week after denting the Euro market with a junk rating for Portuguese debt. Like Portugal, Ireland is struggling to resuscitate its economy after the global financial crisis and may require a second bailout. In a press release about the rating adjustment, Moody's cites that second round of official financing as a reason for the downgrade and warns of a negative outlook:
Although Moody's acknowledges that Ireland has shown a strong commitment to fiscal consolidation and has, to date, delivered on its programme objectives, the rating agency nevertheless notes that implementation risks remain significant, particularly in light of the continued weakness in the Irish economy.
Moody's rating brings Ireland from a sub-prime Baa3 rating to a Ba1, the highest of the junk ratings, but it shouldn't come as much of a surprise to analysts. After Moody's similar move with Portugal's decaying debt last week, many predicted that Ireland might be next. Nevertheless, Dow Jones Newswires reports that the euro "fell broadly against its rivals" with the news.
Along with Portugal and Greece, Ireland is now the third euro country with a junk rating on its bonds, raising serious concerns from the nation's leaders and citizens alike. At least, Irish protestors have kept their sense of humor.