Irish Debt Outlook Cut to ‘Negative’ at Moody’s

Jan. 30 (Bloomberg) -- Ireland’s government debt-rating outlook was lowered by Moody’s Investors Service, which said the financial crisis is likely to “significantly impact” the country’s economic strength.

The outlook on the top Aaa rating was changed to “negative” from “stable,” Moody’s said in a statement from Frankfurt today. The risk of holding Irish debt rose to the highest in Europe, credit default swaps showed.

Ireland’s government is seeking an agreement with labor unions and employer lobby groups to cut public spending and narrow a widening budget deficit as the economy slips deeper into a recession. The economy will contract 5 percent this year, the most of any euro-area nation, and the budget deficit will soar to almost four times the European Union limit, according to the European Commission. Ireland became Aaa in May 1998.

The Aaa rating remains “appropriate at this point,” Dietmar Hornung, a Moody’s analyst in New York, said in the statement. Ireland “entered the current financial crisis in a relatively favorable fiscal position” and it’s “too early to conclude that most of the factors that contributed to its economic vitality have been structurally eroded.”

Standard & Poor’s lowered the outlook on Ireland’s debt to “negative” from “stable” on Jan. 9. S&P also cut its ratings on Spain, Portugal and Greece this month.

Irish Swaps

Credit-default swaps on Ireland rose 2 basis points to 262.5, compared with 255 for Greece, according to CMA Datavision. Greece is rated four steps lower by Moody’s at A1. The Irish swaps also cost more than contracts on the debt of Chile, the Czech Republic, Israel, Malaysia, Saudi Arabia, Thailand and China, CMA prices showed.

http://www.bloomberg.com/apps/news?pid=20601087&sid=alJexaGrK3h4&refer=home

Moody's is a terrorist!