BREAKING NEWS

Lead analyst cuts Irish credit rating,stock exchange slumps

By ASSOCIATED PRESS

JULY 19, 2010 15:45

DUBLIN — The Moody's agency cut Ireland's credit rating Monday, citing the country's swelling national debt, the unpredictable cost of its bank-bailout plans and its weak growth prospects for the next three to five years.

Shares on the Irish Stock Exchange slumped after Dietmar Hornung, Moody's lead analyst for Ireland, announced that the New York-based agency was dropping its credit-worthiness rating one notch to Aa2. Moody's previously cut Ireland's rating to Aa1 from the top grade, Aaa, in July 2009 as Ireland plunged into its worst recession since the Great Depression of the 1930s.

Hornung cited what he called "the Irish government's gradual but significant loss of financial strength as reflected by its deteriorating debt affordability."

However, Ireland's National Treasury Management Agency or NTMA — responsible for managing Ireland's ballooning government debts — welcomed Moody's accompanying decision to raise its outlook on the risk of loaning money to Ireland to "stable" from its previous "negative" rating. That suggests it will issue no more downgrades in coming months.

Banks led shares lower Monday on the Irish Stock Exchange. Allied Irish and Bank of Ireland both fell about 2 percent to €0.86 and €0.68 respectively. Irish Life & Permanent — the only Irish bank not receiving government aid — rose marginally to €1.59.

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