IRELAND’S CREDIT RATING has been downgraded by two levels from Baa1 to Baa3, the lowest investment grade rating and one notch off junk status as the country struggles to restore economic growth.
Bloomberg reports that Ireland’s outlook is negative as a result of the downgrading to a level that puts the country on a par with Iceland, Tunisia, Romania and Brazil.
The latest rating is just one notch off junk status and follows the soaring cost of Greek borrowing on Thursday which caused Germany to say for the first time that Athens may have to restructure its huge public debt, Reuters reports.
Such announcements have implications like this latest downgrading for Greece’s bailout partners Ireland and, imminently, Portugal.
And the outlook was less than positive according to a Moody’s statement which said:
Should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow.
Moody’s added that Ireland may require further austerity measures to meet fiscal goals and warned that the recent rise in European Central Bank interest rates could have a negative affect on the country’s financial position.
In December, Moody’s dramatically downgraded Ireland’s credit rating by five notches from Aa2 to Baa1 in response to the EU/IMF bailout package.
Just last month the agency said that a cut in Ireland’s rating was not imminent.
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