Moody's cuts Ireland rating to junk status

Nodin

Credit agency Moody's has tonight downgraded Ireland's debt rating to the junk status of Ba1.
Moody's said it reduced the rating by one notch because there was a 'growing likelihood' that Ireland will need more bailout aid in late 2013 when the current bailout ends.
The agency warned of further downgrades as the economy struggles to pull out of the financial crisis.

http://www.rte.ie/news/2011/0712/economy1.html
One often gets the feeling of a sort of an inevitable downward spiral, which can be delayed, but never stopped.

irishh_bob

Nodin wrote: »

http://www.rte.ie/news/2011/0712/economy1.html
One often gets the feeling of a sort of an inevitable downward spiral, which can be delayed, but never stopped.

the snowball is getting bigger and bigger

MrMatisse

This is not going to end well.

Tabnabs

Moody's has tonight cut Ireland's credit rating to junk.

The ratings agency said it was downgrading the country's bond ratings by one noth to Ba1 from Baa3 with a negative outlook.

Ireland joins Portugal and Greece in becoming the third euro zone country to have its ratings cut to junk. Portugal's rating was cut four levels to Ba2 just over a week ago.

"The key driver for today's rating action is the growing possibility that following the end of the current European Union-International Monetary Fund support programme at year-end 2013 Ireland is likely to need further rounds of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a precondition for such additional support," Moody's said in a statement.

The ratings agency previously cut Ireland's credit rating two levels on April 15th to the lowest investment grade.

"Although Moody’s acknowledges that Ireland has shown a strong commitment to fiscal consolidation and has, to date, delivered on its programme objectives, the rating agency nevertheless notes that implementation risks remain significant, particularly in light of the continued weakness in the Irish economy," it said.

"The negative outlook on the ratings of the Government of Ireland reflects these significant implementation risks to the country’s deficit reduction plan as well as the shift in tone among EU governments towards the conditions under which support to distressed euro area sovereigns will be made available," it added.

Moody’s has today also downgraded Ireland’s short-term issuer rating by one notch to Non-Prime (commensurate with a Ba1 debt rating) from Prime-3.

In addition, the ratings agency downgraded by one notch to Ba1 from Baa3 the long-term rating and to Non-Prime from Prime-3 the short-term rating of Ireland’s National Asset Management Agency (Nama).

In a statement issued this evening, the National Treasury Management Agency (NTMA) stressed it had sufficient funding under the EU-IMF bailout to cover all its financing requirements until the end of 2013.

It said that the situation in the euro zone was evolving rapidly and that decisions reached at yesterday's meeting of European financial ministers, which include an enhancing of the European Financial Stability Facility, were "positive developments" for Ireland.

It added that the country retains investment-grade status with the other main ratings agencies.

From the IT
http://www.irishtimes.com/newspaper/breaking/2011/0712/breaking54.html

kippy

Is anyone that surprised?

thetonynator

After how wrong the ratings agencies got it for so long, why does anyone still pay the slightest bit of attention to their stupid made up levels? Their actions of downgrading are making the problems worse instead of helping sort them.

Bullseye1

They are saying we are going to need another bailout at he end of 2013 so why are these guys in such a hurry to downgrade us and the other EU members? It's like these guys Re beating up on the smaller countries. The US is in the ****s and they cannot agree a budget strategy yet their rating hasn't been touched.

There is fun and games going on between these guys and the EU/ECB.

hmmm

The biggest danger for us from this was that the ECB would no longer accept Irish bonds as collateral. Thankfully Greece got there first with junk status and the ECB blinked, so this isn't a big deal.

kippy

Bullseye1 wrote: »

They are saying we are going to need another bailout at he end of 2013 so why are these guys in such a hurry to downgrade us and the other EU members? It's like these guys Re beating up on the smaller countries. The US is in the ****s and they cannot agree a budget strategy yet their rating hasn't been touched.

There is fun and games going on between these guys and the EU/ECB.

Well to be fair, I believe they have a point.
While they may have gotten it badly wrong in the past, unless there is some serious debt writedowns in the next few years a full default is gonna hit us if the euro doesnt collapse before then.

Thirdfox

According to the IT the Portuguese got there second... but as the NTMA notes, we don't need funding until 2013 so the only important rating or bond spread is what will face Ireland at the end of 2013.

There are some people working their asses off to try and recover the situation (which is very grave and serious). The downgrade is not good news, but it's not extremely significant news since we've left the bond markets for now.

Bullseye1

Everyone including the dog on the street knows there is going to be a default of some kind. But the question is when and why are these guys in such a hurry to draw their conclusions on when? If we were the US or UK do you think Moody's and the other rating agencies would be as quick to downgrade their rating.

ei.sdraob

Thirdfox wrote: »

According to the IT the Portuguese got there second... but as the NTMA notes, we don't need funding until 2013 so the only important rating or bond spread is what will face Ireland at the end of 2013.

the market does not believe we will last until then

edit: Remember late Lenihan, Brian telling us that we are "well capitalised" into 2011, look how that ended up...

Thirdfox

We do have a change in government (though one might note that the civil servants at the top advising each government seemingly remains the same).

I don't think that Ireland's underlying situation is as bad as what Greece appears to be. Thus, while we are currently being crushed by debt due to bad economic policies and that bank guarantee, I think (and who the heck am I anyway writing on an online forum ) that we do have the tools to dig ourselves out of this with sound (and painful) economic management.

If I believed otherwise I would have taken a more lucrative job abroad - but I think this country isn't finished just yet. Again, my opinion counts for very little

tara73

Bullseye1 wrote: »

They are saying we are going to need another bailout at he end of 2013 so why are these guys in such a hurry to downgrade us and the other EU members? It's like these guys Re beating up on the smaller countries. The US is in the ****s and they cannot agree a budget strategy yet their rating hasn't been touched.

There is fun and games going on between these guys and the EU/ECB.

this is it. I wrote it before and I ask again: who is moodys or any other 'rating agency' from the us to rate countries over the world about their credit credibility. nobody should give a f*** about it, as:

the u.s of america is one of the most bancrupt/in dept countries in the world and they just try to distract from it with ridiculously rating other countries / trying to bring down other economies / europe.

If it wouldn't be so sad and serious, it would just be hilarious.

this is the new war, economical war done by the internet.

dissed doc

thetonynator wrote: »

After how wrong the ratings agencies got it for so long, why does anyone still pay the slightest bit of attention to their stupid made up levels? Their actions of downgrading are making the problems worse instead of helping sort them.

There relevance is becoming less and less. They will have to apply the same stuff to the US and UK which drive the "anti Euro" vibe they spout. Wait until Sept/OCt.

What it really means is not credit worthiness, but the chances of international investors getting great returns from BS pension and property schemes. AAA = your massive ponzi scheme will make buckets of money for billionaires. Ba1 = your oversold high risk pension scheme (like the one from the UK) will lose money. It has zero to do with the credit worthiness or risk for the people - the levels are reports for investors.

Crazy Horse 6

This ain't good

ei.sdraob

tara73 wrote: »

this is it. I wrote it before and I ask again: who is moodys or any other 'rating agency' from the us to rate countries over the world about their credit credibility. nobody should give a f*** about it, as:

the u.s of america is one of the most bancrupt/in dept countries in the world and they just try to distract from it with ridiculously rating other countries / trying to bring down other economies / europe.

If it wouldn't be so sad and serious, it would just be hilarious.

this is the new war, economical war done by the internet.

Oh please, the US could and should default in order to teach China and few others a lesson in capitalism.
So they default? so what?? he who has the biggest guns ...
anyways the US led MNC sector is the only positive going for Ireland at moment, be careful what you wish for

Tora Bora

This would never, ever have happened under a FF government.

Scofflaw

Bullseye1 wrote:

Everyone including the dog on the street knows there is going to be a default of some kind. But the question is when and why are these guys in such a hurry to draw their conclusions on when? If we were the US or UK do you think Moody's and the other rating agencies would be as quick to downgrade their rating.

It's tempting to view it as part of the fight between the markets and the EU's politicians. The politicians say "we're going to let Greece off some of its debt by burning the private investors", and the ratings agencies say "if you do that, we'll punish you - see how we downgrade you for even suggesting it":

"The key driver for today's rating action is the growing possibility that following the end of the current European Union-International Monetary Fund support programme at year-end 2013 Ireland is likely to need further rounds of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a precondition for such additional support," Moody's said in a statement.

cordially,
Scofflaw

tara73

ei.sdraob wrote: »

Oh please, the US could and should default in order to teach China and few others a lesson in capitalism.
So they default? so what?? he who has the biggest guns ...
anyways the US led MNC sector is the only positive going for Ireland at moment, be careful what you wish for

yes, this is it, as well.

ireland adopted the american financial model/mentality which is based on the believe there's endless money to borrow and an economy can be led by spending this borrowed/fake money from the consumers without taking into account/thinking ahead if there's any real value backed up by this borrowed money, means export goods or knowledge aquired to be sold.

so it's picking from everywhere, adopting the big easy life from living on fake money from the u.s and getting support from the european union, aka, borrowing from the 'german-franco' interest rates.
in no other eu country there was adopted the american financial system to the same extend as in ireland.

and now it's to find a culprit for the own lack of thinking ahead/ always doing how it suits best for the moment to have an easy life. and who is it? the european union/ecb.
it's really sickening.

why are the irish not spending their energy to think of a concept to try to establish their own sustainability, getting their arses up and produce something of value to be independent so they don't have to rely on anybody and don't have to take part in a community outside themselves as the european union, as they don't seem to really want to take part in it.

or is it they just need somebody to blame for their own inability to just do that, take responsibility for themselves?

kippy

Scofflaw wrote: »

It's tempting to view it as part of the fight between the markets and the EU's politicians. The politicians say "we're going to let Greece off some of its debt by burning the private investors", and the ratings agencies say "if you do that, we'll punish you - see how we downgrade you for even suggesting it":



cordially,
Scofflaw

Apologies for a slight OT query but what are the ratings agencies vested interest here?
Are they somehow tied in with the lenders who could lose out if a partial write down takes place?
You are insinuating that they are working together with the lenders to ensure politicians are held over the barrel of a gun (no harm sometimes) so to speak to ensure private sector lenders losses are kept low.

This is surely a massive conflict of interest if it is the case and one would wonder (I've wondered since they never seen the issues with countries/banks loanbooks until it was in their face) what the whole point of them are?

ei.sdraob

Scofflaw wrote: »

It's tempting to view it as part of the fight between the markets and the EU's politicians. The politicians say "we're going to let Greece off some of its debt by burning the private investors", and the ratings agencies say "if you do that, we'll punish you - see how we downgrade you for even suggesting it":

Once again I have to disagree with your commentary

PolishVisitor

So happy that your arrogance has been tamed down finally

[MOD]Meh - permaban for trolling.[/MOD]

Scofflaw

ei.sdraob wrote: »

Once again I have to disagree with your commentary

Not entirely sure how you see that as disagreement:

EU officials slammed the credit ratings agencies this week after Moody's slashed Portugal's debt to junk status, plunging the markets back into turmoil and calling into question a second bail-out for debt-stricken Greece.

A former Portuguese minister, Barroso said the Moody's downgrade signalled an anti-European bias and suggested it was time for a European ratings agency to emerge as a counterweight to the US-dominated groups.
Friday in Warsaw he said it was 'strange that in such an important matter there is not a rating agency originating in Europe' - but insisted it was not the EU's job to set up such an institution.

You're saying there is no fight between the EU's politicians and "the markets", or are you just disagreeing with me for the sake of it?

cordially,
Scofflaw

ei.sdraob

I am disagreeing with your comment > that this is a response to Greek events.


The EU politicians are acting arrogantly yet again in thinking they are somehow above the markets. They are making the same mistakes made last year and foolish comments left right and center which are adding to the uncertainty.

In last few weeks there has been an attempt to blame the derivatives insurance market and now the rating agencies, in an effort to deflect attention, this is backfiring.

Godge

Thirdfox wrote: »

According to the IT the Portuguese got there second... but as the NTMA notes, we don't need funding until 2013 so the only important rating or bond spread is what will face Ireland at the end of 2013.

There are some people working their asses off to try and recover the situation (which is very grave and serious). The downgrade is not good news, but it's not extremely significant news since we've left the bond markets for now.

This came up in another thread about a week ago and I agreed that it doesn't matter what the ratings agencies think now, it only matters when we go back to the market.

The issue raised with me last week was the ECB position on junk-ratings but that has since been solved so I agree with you that it doesn't matter.

In fact, I don't think it even matters what it thought in 2013. If everything goes right and we don't have to pour as much money into the banks as we think, and economic growth closed the taxation/spending gap, then we may have enough money into early 2014. Even if we don't, if we do the right things, the IMF may lend to us anyway in a second bailout. It won't be as damaging as the first one if it is just a way to see us back to the market.

opinion guy

Scofflaw wrote: »

It's tempting to view it as part of the fight between the markets and the EU's politicians. The politicians say "we're going to let Greece off some of its debt by burning the private investors", and the ratings agencies say "if you do that, we'll punish you - see how we downgrade you for even suggesting it":

cordially,
Scofflaw

kippy wrote: »

Apologies for a slight OT query but what are the ratings agencies vested interest here?
Are they somehow tied in with the lenders who could lose out if a partial write down takes place?
You are insinuating that they are working together with the lenders to ensure politicians are held over the barrel of a gun (no harm sometimes) so to speak to ensure private sector lenders losses are kept low.

This is surely a massive conflict of interest if it is the case and one would wonder (I've wondered since they never seen the issues with countries/banks loanbooks until it was in their face) what the whole point of them are?

As far as I can see these 'agencies' are in part responsible for the current mess we are in. I mean they are basically functioning as media speculators at this stage. They are protecting the private investors who made this fine mess. If you ask me its about time the EU investigate the financial ties between these agencies and the banks and dole out some jail time if any suspicious ties are found

Scofflaw

ei.sdraob wrote: »

I am disagreeing with your comment > that this is a response to Greek events.


The EU politicians are acting arrogantly yet again in thinking they are somehow above the markets. They are making the same mistakes made last year and foolish comments left right and center which are adding to the uncertainty.

In last few weeks there has been an attempt to blame the derivatives insurance market and now the rating agencies, in an effort to deflect attention, this is backfiring.

Ah - you're disagreeing with something I didn't say, then.

cordially,
Scofflaw

Uuuh Patsy

Bullseye1 wrote: »

They are saying we are going to need another bailout at he end of 2013 so why are these guys in such a hurry to downgrade us and the other EU members? It's like these guys Re beating up on the smaller countries. The US is in the ****s and they cannot agree a budget strategy yet their rating hasn't been touched.

There is fun and games going on between these guys and the EU/ECB.

its an intentional strategy to get indebted countries to privatise their state assets. thereby swapping imaginary debt for real assets. this is the plan. its a fascist takeover. government and business (banks) above the public

jank

tara73 wrote: »

this is it. I wrote it before and I ask again: who is moodys or any other 'rating agency' from the us to rate countries over the world about their credit credibility. nobody should give a f*** about it, as:

the u.s of america is one of the most bancrupt/in dept countries in the world and they just try to distract from it with ridiculously rating other countries / trying to bring down other economies / europe.

If it wouldn't be so sad and serious, it would just be hilarious.

this is the new war, economical war done by the internet.

So de internet did it?

1huge1

Moody's seems to be at the forefront of the downgrades as of late, perhaps losing less credibility in doing so, I'm curious as to how S&P will follow.


Could all this lead to the creation of a european ratings agency, time will tell.

Bullseye1

It may lead to a EU Bond.

ei.sdraob

Bullseye1 wrote: »

It may lead to a EU Bond.

That decision would be made by the courts who are already investigating the legality of existing "bailouts" not by politicians.

If politicians ignore or break the treaties then they would be setting a very dangerous precedent and risk the collapse of the EU itself

opinion guy

So question.
Whats the legality of thousands of boards.ie, boards.gr and boards.pr members slowly buying up moodys stock and then on a whim deciding to sell them all at once some day ????

doc_17

I'd love to see a Credit Ratings credit rating rating agency. You know....the monitors of the monitors.

This group would review how abysmally wrong these dopey d**ks got in the past 10 years and rate hem accordingly.

They might be right today....but my broken watch will be right twice as much today

loldog

Moodys are criminals and should be in jail, along with the rest of those gangsters selling Goldmans Sachs "****ty deals" to charities and pension funds.

https://www.youtube.com/watch?v=cTMY5qvAigE

The whole corrupt system needs to be burned down and rebuilt from the ground up with new debt-free currency.

.

Dannyboy83

A load of bluster over nothing.
Moody's have about as much credibility as the Irish government these days.

Nothing we didn't already know has been revealed

later12

Dannyboy83 wrote: »

A load of bluster over nothing.
Moody's have about as much credibility as the Irish government these days.

Nothing we didn't already know has been revealed

This is an entirely logical move. It looks like there will shortly be a form of Greek default, and it is reasonable to deduce that Ireland will follow suit on restructuring its debt. This credit ratings agency is simply saying what we all agree (does anyone seriously doubt it?) that Ireland will restructure a part of its external debt. That makes us a non-investment grade entity.

People shouldn't be ticked off with the ratings agency here - the fault very much lies with the European authorities who have sat on their asses and failed to respond to the emerging crisis over the past 2 years (in particular).

Recently you had the European authorities come out in unison to whine about the Greek cut. They go back into their offices, do nothing, and only come out to say something new when Ireland is cut? They are way behind the curve as usual.

Dannyboy83

later10 wrote: »

This is an entirely logical move. It looks like there will shortly be a form of Greek default, and it is reasonable to deduce that Ireland will follow suit on restructuring its debt. This credit ratings agency is simply saying what we all agree (does anyone seriously doubt it?) that Ireland will restructure a part of its external debt. That makes us a non-investment grade entity.

People shouldn't be ticked off with the ratings agency here - the fault very much lies with the European authorities who have sat on their asses and failed to respond to the emerging crisis over the past 2 years (in particular).

Recently you had the European authorities come out in unison to whine about the Greek cut. They go back into their offices, do nothing, and only come out to say something new when Ireland is cut? They are way behind the curve as usual.

Good post.
The European leaders have been reactive all along, waiting until the next leg of the crisis emerges, then react, rather than being ever actually being proactive.
The local leaders in the troubled countries haven't gotten off their arses either, passing the buck to Europe all the time.

Still, I don't see that any new information has been revealed.
But as you said, the credit agency is simply confirming what we all agree (and have agreed for quite some time).

Question for you:
Do you see Moodys as a Precipitator or Indicator?

later12

I don't know, I'm not an expert on the agencies - due to their very nature, I don't think anybody can be. But they are magnifiers of investor sentiment. Although CRAs only respond to developments, as opposed to initiating them, their negative ratings decisions tend to worsen an already extant problem, or conversely to enlarge an already improving market sentiment.

So CRAs do play a role in self fulfilling prophecies, they are too concentrated, and despite their efforts, their methods are still too opaque. They also have other problems besides. However, this is one time when we can say for sure that while we may dislike the rating, it must be one that we agree is deserved. If one doesn't agree, then one must think that Ireland is going to honour all of its obligations despite an imminent Greek restructuring, and I think most of us here would agree that this is not an opinion that can now be taken seriously.

Scofflaw

We've been expecting a restructuring of debt all along, surely? The question was only whether it wouldn't happen until 2013, or whether events would force it to happen before that - but the point about not going for a solo run on default/restructuring was that a pan-European solution was always likely anyway, and within our funded timeframe.

cordially,
Scofflaw

later12

Not exactly. A restructuring was never the preferred option of a lot of people who would have preferred to have seen something like the establishment of a European Treasury prior to, or during, 2013. Like the new EFSF but more permanent. I don't think that a restructuring - of Irish debt, at least - was inevitable if that had been seriously examined.

Nijmegen

This decision is based on entirely logical assumptions and conclusions.

On the one side, we have the EU reaction to ongoing events and the likelyhood of the mechanisms they'll use to unwind (or not) the debt crises in the PIIGS countries.

On the other side, you have the Irish program that is based on meeting certain fiscal and growth targets. The growth side has not been showing up.

If that happens, we take in less tax than we expect and we cannot afford to run the country with the funds available and need a second bailout.

Second bailout goes back to the first point, and we go round in a circular firing squad and the risk of default is quite high.

Pandora2

MrMatisse wrote: »

This is not going to end well.

The beginning was a bit of a shambles as well!!:eek:;)

tara73

Dannyboy83 wrote: »

A load of bluster over nothing.
Moody's have about as much credibility as the Irish government these days.

this might be the case for the people in ireland, but they obviously still have an impact in the financial system and that's the big problem/ scandal. it's always big headline news around the world, they think they have a right to announce such stuff and manipulate the markets further with it.

and be aware that not everybody knows how bad it is in ireland, there are other countries where people don't have much insight knowledge about the situation in greece or ireland or portugal. so there are actually people / countries / investors who still react on such 'news'.
when the imf went to ireland in november 2010, ireland was headline in the news in europe but since then it's very quiet, nothing to be heard about it at all.

so I wouldn't call it bluster over nothing.

tara73

later10 wrote: »

I don't know, I'm not an expert on the agencies - due to their very nature, I don't think anybody can be.

you don't need to be an expert, you just need 3 seconds on the internet to find out about their manipulative/blackmailing behaviour.

http://en.wikipedia.org/wiki/Moody%27s

opinion guy

Moody's are making more friends for themselves:

http://www.bbc.co.uk/news/business-14142621

tara73

opinion guy wrote: »

Moody's are making more friends for themselves:

http://www.bbc.co.uk/news/business-14142621

it's getting more and more absurd every day:eek: threatening now the u.s government with downgrading from AAA or whatever if they don't raise their debt limits...has anybody words for it.
everybody in europe is more or less introducing austerity packages and they have the impertinence to blackmail their government to take on more debts.

think it is comparable to the roman empire fighting desperately not to go under.

communism was a construct from strange theorists but we can clearly see now that capitalism is not much more sustainable...

ei.sdraob

tara73 wrote: »

it's getting more and more absurd every day:eek: threatening now the u.s government with downgrading from AAA or whatever if they don't raise their debt limits...has anybody words for it.
everybody in europe is more or less introducing austerity packages and they have the impertinence to blackmail their government to take on more debts.

think it is comparable to the roman empire fighting desperately not to go under.

communism was a construct from strange theorists but we can clearly see now that capitalism is not much more sustainable...

Weren't you the one complaining about USs AAA rating earlier in thread?

tara73

ei.sdraob wrote: »

Weren't you the one complaining about USs AAA rating earlier in thread?

yes, and? I'm doing it still.

beeftotheheels

tara73 wrote: »

it's getting more and more absurd every day:eek: threatening now the u.s government with downgrading from AAA or whatever if they don't raise their debt limits...

I think the US example is a good one because if AAA means very unlikely to default, even if only for a small period of time, then there is no justification for leaving the US as AAA when they run out of cash on August 2nd and the Republicans don't appear to be joined enough to pass the necessary deficit package.

We're funded through to next year so while we may default then (or may not depending on how things pan out), the US could default in the coming weeks. S&P have confirmed that if the US went with the Republican suggestion of paying interest but not paying social security then that would also count as a default.

But the risk off trade likes US treasuries, so you need to think long and hard about downgrading treasuries - because just as with Ireland if the ratings agencies issue a rating well out of step with market perception then that will be seen to hurt their credibility - and credibility is their business case because somehow, post subprime, they are still viewed as having credibility.