Moody’s has today downgraded the long-term unguaranteed senior unsecured debt ratings of Anglo Irish Bank and Irish Nationwide Building Society to Caa2, from Caa1.
The long-term bank deposit ratings of both institutions were downgraded at Caa1 with a negative outlook.
There is no rating impact on the stand-alone bank financial strength ratings (BFSRs), the subordinated and tier 1 debt ratings, and government-guaranteed debt ratings of the two institutions.
Currently the two institutions have approximately €3.8 billion of senior unsecured debt outstanding.
The ratings agency said today's downgrade follows recent statements made by Minister for Finance Michael Noonan about inflicting losses on senior bondholders in the institutions.
"The recent statements by members of the Government that it will discuss this issue again with the troika in the autumn increases the likelihood, in Moody’s view, that losses could be imposed on this particular class of debt at these two institutions. The one notch downgrade to Caa2 therefore positions the banks’ unguaranteed senior unsecured debt ratings one notch below the deposit rating, based on this concern," the agency said.
"The negative outlook reflects the continuing uncertainty about a potential default on these instruments as well as the potential recovery in such a scenario," it added.