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Moody’s downgrades Ireland rating to Aa2

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by Kay Mitchell
”Moody's

Credit ratings agency Moody’s has today announced it has cut Ireland’s sovereign bond rating to Aa2 from Aa1.

In addition, the agency cut its rating on Ireland’s bad bank, the National Asset Management Agency to Aa2, with a stable outlook.

Other agencies, Standard & Poor’s and Fitch Ratings put Ireland’s rating at AA and AA- respectively.

Meanwhile, in a statement, Dietmar Hornung, Moody’s Senior Credit Officer, said: “Today’s downgrade is primarily driven by the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability.”

The downgrade comes just a few weeks after it emerged Ireland had finally exited a prolonged recession after figures revealed the economy grew by 2.7% in the January to March period.

It was believed that Ireland had exited recession in the third quarter of last year but an initial estimate of growth was later revised to show a contraction within the economy.

Ireland’s economy was one of the worst performers in the western world last year and prior to the current downturn, the Irish economy had not experienced a recession since 1983.

The economy slipped into recession during the first half of 2008 – becoming the first nation of the euro zone to do so.

Ireland experienced a property boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the euro zone.

However, the ailing housing market has had a major impact on the former “Celtic Tiger” economy and property prices have plummeted since their high in 2006.

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News posted: July 19, 2010

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