S&P chops Irish rating

STANDARD and Poor’s (S&P) yesterday cut Ireland’s sovereign credit rating for the second time in three months and warned it could fall further because of concern about the soaring cost of bailing out the country’s banking sector.

Ireland is now rated at “AA” with a negative outlook, S&P said. It was previously “AA+” and the country had a precious “triple-A” rating only three months ago. S&P said in a statement: “The rating could be lowered again if asset quality in the Irish banking system deteriorates at a faster pace than we expect.”

The cost of protecting Irish government debt against default rose to 221 basis points from 215 basis points seen just before S&P said it was downgrading Ireland’s debt, according to monitor CMA DataVision.

This means it now costs €221,000 per year to insure an exposure of €10m of Irish government bonds.

Ten-year Irish government bonds underperformed euro zone benchmark German Bunds widening by four basis points to 204 basis points.

Rival rating agency Moody’s warned in April that it could also cut Ireland’s AAA credit rating citing to the country’s soaring debt levels.