Ireland suffers further downgrade on debt concerns

Standard & Poor’s has cut Ireland’s credit rating by one notch to BBB+ from A- citing debt concerns but said further downgrades were now unlikely following recent stress tests.

The ratings agency also said the outlook is stable and believes that the Irish economy is “set to gradually recover”.

S&P credit analyst Frank Gill comments: “The outlook is now stable, reflecting our opinion that the assumptions underlying the stress test (…) are robust and that the … net cost to the Irish state of additional recapitalisation, plus the contingency buffer for the banking system, is within our range of expectations, albeit at the upper end.”

Meanwhile, rival agency Fitch has placed its ratings on Ireland on “negative watch” with the possibility of a downgrade in the short-term.

The downgrade comes after it was revealed that Ireland’s lenders will need an additional €24 billion (£21 billion) to weather the financial crisis.

These were the findings of the stress tests conducted on Ireland’s banks – Allied Irish Banks, Bank of Ireland, Educational Building Society (EBS) and the Irish Life & Permanent.

The latest stress tests were deemed necessary after last year’s tests failed to reveal the weakness among banks in Ireland.

The latest figures take the total cost of the Government’s bailout to around €70 billion.

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