Ireland – Moody’s cut rating to junk bond status
Once again we see the ratings agency Moody’s acting in a manner that is probably not in the best interest of a country in trouble. This time it is Ireland and Moody’s has taken the step of cutting its rating to junk bond status. This is devastating news for Ireland. The BBC News has the story on this subject:
Moody’s said its decision was based on the “growing possibility” that Ireland would need a second bail-out before it can return to capital markets.
The current European Union and International Monetary Fund support programme is due to end in late 2013.
It comes at a time when markets fear the debt crisis in the eurozone could spread to Italy and Spain.
Ireland, Greece and Portugal have all been downgraded by ratings agencies several times in recent months.
I think that I have to agree with the Greek Foreign Minister regarding the behaviour of the ratings agencies, because their decisions do impact severely on the ability of these nations to borrow, an ultimately to repay their debt. The change in status means that the interest charged on borrowings is raised to higher and higher levels. How does that help to repay the debt?
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