Moody's cuts Irish banks to junk

 

Rating agency Moody’s has downgraded long-term deposits at Irish banks by two notches to junk status.

This follows last week’s cut to Ireland’s sovereign debt rating by the agency. Today’s move means Bank of Ireland is now rated Ba1 while AIB , EBS and Irish Life & Permanent are rated Ba2.

The outlook on the long-term bank deposit and unguaranteed senior unsecured debt ratings of these institutions is negative, the agency said.

It said the reduction in the level of systemic support embedded in our deposit ratings followed the downgrading of the sovereign rating last week.

Moody’s said there is a high level of uncertainty around whether the Government would extend further support to the banking sector if required, beyond the €35 billion that has been committed to as part of the EU/IMF support package.

“As a result, Moody’s is no longer incorporating any systemic support in the unguaranteed  senior unsecured debt ratings of the domestic Irish banks and these are now placed at the same level as the stand-alone ratings of the banks,” it said.

The agency last week cut the rating on Ireland’s foreign and local currency government bonds by two notches to Baa3 from Baa1, just above junk status.