Credit rating of IL&P lowered

CREDIT rating agency, Standard & Poor’s (S&P) has lowered its rating on Irish Life & Permanent (IL&P) from an A-/A-1 level to BBB+/A-2, adding that the lender’s overall financial profile was “relatively poor”.

The rate cut was apparently brought about by IL&P’s “heavy reliance” on wholesale funding on the international money markets – the cost of such funding having increased sharply due to the global financial crisis.

S&P opined that there existed uncertainty about IL&P’s future direction, but added that the group’s outlook was stable. Such a feeling would seem to suggest that no further credit ratings cut on the group is due in the foreseeable future.

IL&P’s reaction was relatively relaxed. A spokesperson said yesterday that such a cut was generally signalled given S&P’s previous similar actions in relation to the other main Irish banks and the Irish economy.

The company said it valued the fact the S&P statement gave “strong endorsement” to IL&P’s life and pensions business and said any weaknesses in its retail banking division would be dealt with by the Government’s guarantee scheme.

IL&P’s share price fell by 6c – almost 2% – yesterday to €3.10.