Ireland's credit rating further downgraded

Ratings agency Standard & Poor's today cut its rating on Ireland by one notch to A minus.

The agency also warned that another downgrade may be possible as soon as April, as fears persist about the stability of the banking sector despite the €67bn IMF/EU bailout.

The agency said its outlook for Ireland remained negative as additional capital needs for the financial sector were yet unclear.

S&P analyst Frank Gill said much will depend on how the economy fares over the coming months.

"Were the labour market to deteriorate further, a rise in the level of delinquencies in the domestic banks' mortgage books could result in higher new capital requirements than we presently assume," Gill was quoted as saying.

However, he said Ireland's rating may be supported if the EU comes up with a more comprehensive solution to the debt crisis that has seen both Greece and Ireland turn to their eurozone partners and the International Monetary Fund for bailout loans.

"The emergence of a European sovereign debt restructuring framework that could reduce the perceived adverse political and financial cost of a sovereign debt restructuring could also lead us to reconsider our view of Ireland's creditworthiness," said Gill.

Fitch Ratings cut Ireland from A+ to BBB+ in December, while Moody's downgraded from Aa2 to Baa1.