Moody's cut Ireland ratings to junk status

10:51, July 13, 2011      

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Moody's Investors Service on Tuesday downgraded Ireland's foreign- and local-currency government bond ratings by one notch from Baa3 to the junk status of Ba1, saying that the country may need further bailout from international organizations.

The rating agency said in a statement that Ireland is likely to need further rounds of financing before it can return to the private market as the current European Union and International Monetary Fund support program will end at the end of year 2013.

Although Moody's acknowledged in the statement that Ireland has shown a strong commitment to fiscal consolidation and has, to date, delivered on its program objectives, the rating agency nevertheless stressed that implementation risks remain significant, particularly in light of the continued weakness in the Irish economy.

The downgrade comes amid European debt problems seemed to spread over euro-zone countries. Lately, Italian government bonds' yields saw strong surge as investors fled from the bonds as the risk of default was mounting. Spanish government bond yields also witnessed a sharp rise.

Moody's cut Portugal's long-term government bond ratings by four notches to junk territory a week ago, citing that the country is still unable to finance at sustainable rates in the markets.

Source: Xinhua
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