S&P could cut ratings again if bank bailout costs increase

IRELAND could face a further downgrade from Standard & Poor’s (S&P) as the ratings agency expects the country to inject as much as €35 billion into Anglo Irish Bank “over time”.

S&P said it was downgrading Ireland’s long-term sovereign credit rating one step to AA- on concern about the rising cost of supporting the country’s struggling banks. This is Ireland’s lowest rating since 1995.

A lower rating can make it more expensive for a government to borrow money on the markets. which is a vital tool for countries like Ireland that need to finance large deficits.