CREDIT RATINGS AGENCY Moody’s might also cut Ireland’s rating to junk following Portugal’s demotion to the status yesterday, according to reports.

Portugal’s rating was cut to junk status because the agency believed it posed a high default risk: Moody’s said there was a “growing risk” that Portugal would require another bailout before it could return to the markets, and cited fears that it will not meet the “deficit reduction and debt stabilisation targets” agreed with the EU and IMF.

Today, an analyst speaking to Bloomberg said that Ireland could face an “imminent downgrade” in the wake of Portugal’s downgrade: “If not re-entering the public funding markets has significance for a sovereign’s rating, then clearly if our view proves correct, then Ireland will suffer an imminent downgrade,” said Cathal O’Leary, head of fixed income sales at NCB Stockbrokers in Dublin.

Similarly, Goodbody Stockbrokers said that Portugal’s downgrade posed “contagion risks” for Ireland.

Last April, Moody’s lowered Ireland’s rating to Baa3 – the lowest investment grade – and set the outlook on the country as ‘negative’.

Meanwhile, Finance Minister Michael Noonan has warned yesterday that cuts in this year’s Budget may be even more than the €3.6 billion required in the IMF/EU bailout deal, after the country’s six-monthly Exchequer returns showed that Ireland’s budget deficit now stands at €10.8 billion.

Read more: Moody’s downgrades Portugal to junk >

Read more: ‘Difficult’ Budget may include €4billion in cuts, warns Noonan >

Read more: Budget deficit for first half of the year stands at €10.8bn >