Yesterday’s move on AIB, Bank of Ireland, the EBS Building Society, Irish Life & Permanent (IL&P) and ICS Building Society follows Moody’s lowering of Government bond ratings by two notches (from BAA3 down to BAA1) to just above junk status on Friday.
Moody’s rival Fitch Ratings has, meanwhile, called Ireland’s solvency rating “fragile”, adding that an improvement in the country’s debt situation depends on economic growth and the success of the Government’s four-year economic plan.
Fitch added that “significant threats to an economic recovery and fiscal consolidation remain” for Ireland.
Fitch t also said that it doesn’t anticipate the Government having to pump any more funds, beyond what is known to be due, into the banks.
Moody’s downgrade of the banks now places Bank of Ireland and its subsidiary, ICS, at BA1 level and the rest of the relevant institutions at a rating of BA2.
“The outlook on the long-term bank deposit and unguaranteed senior unsecured debt ratings of these institutions is negative, in line with the outlooks on the Government rating and on the standalone ratings of the banks,” Moody’s said.
Meanwhile, Taoiseach Enda Kenny told Bloomberg yesterday that Ireland will not default on its debt, adding that the Government plans to “continue to pay our way”.
Mr Kenny said that the Government is not looking for any more money from Europe either. He claimed the country is only looking for a greater degree of flexibility in terms of the interest rate on our bailout repayments and the chance to keep our 12.5% corporation tax rate intact.
The Taoiseach also said that it is likely that Anglo Irish Bank won’t need any further state support, something which is due to be clarified next month after stress tests on the institution are unveiled.
Elsewhere yesterday, the cost of insuring AIB junior debt fell as investors exited credit-default swaps over concern that they won’t be sufficiently compensated after the bank extended the maturity of some bonds to 2035.