Moody’s lowers ratings on five lenders’ debt issues

MOODY’S Investors Service lowered the ratings on Government-backed debt issues by five lenders, including Bank of Ireland, following its downgrade of the state to non-investment grade this week.

Moody’s also cut Government-backed debt of Allied Irish Banks, Anglo Irish Bank, EBS Building Society and Irish Life & Permanent to Ba1 from Baa3, it said.

The outlook on the debt is negative and follows a cut of the sovereign rating to the same grade on July 12. Ba1 is Moody’s highest non-investment rating.

Ireland lost its investment-grade rating this week on concern the country may need additional external funding.

The Government in November accepted a bailout plan including €35 billion for Irish banks, and further funds are due to be injected into the lenders this month.

The five institutions all issued public debt under a state-backed guarantee program. The Government approved AIB’s takeover of EBS, both under state control, on June 28.

Moody’s, which didn’t change its ratings on unguaranteed long-term senior unsecured debt of Bank of Ireland, AIB and Irish Life, said the bonds could face further downgrades if the state showed “a greater willingness to impose losses on bondholders”.

Taoiseach Enda Kenny has said he won’t impose losses on senior creditors of the lenders.

Moody’s separately downgraded the short-term debt rating of Housing Finance Agency Plc’s €6 billion of commercial paper, guaranteed by the Government, to NP from P-3.

Moody’s has also downgraded Bord Gáis to Baa3 from Baa1, with a negative outlook.