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RATINGS AGENCY MOODY’S has continued its onslaught on Ireland’s state-owned banks – downgrading its rating of unguaranteed bonds in Anglo and Irish Nationwide.
Unguaranteed senior bonds in the two institutions, which are to be merged and wound down, were downgraded to Caa2 from Caa1 – a downgrade of one notch, but which puts them a massive eight levels below the threshold for ‘junk’.
In a statement, the agency said it was also downgrading the long-term deposit ratings of both institutions to Caa1 – a largely irrelevant move since both banks have sold their deposit books to other state-backed Irish institutions.
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The downgrades come in response to Michael Noonan’s announcement that he intended to enforce burden-sharing on the unguaranteed senior bondholders at the two banks, which were the first to be nationalised as the banking crisis began.
The two banks have about €3.5bn of outstanding senior bonds.
The downgrades indicate that the ratings agency believes senior bondholders in the banks will have to share some of the burden of bailing them out. The plans are subject to ECB approval which has not yet been granted.
All six of Ireland’s banks are now rated as ‘junk’ by Moody’s.
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Does anybody actually care what any of these agencies think? All of them had at least double A ratings for the US banks just before the crises in 2008. The have no credility, yet people seem to rate them!
Who governs the agencies? They are all guilty for causing the recession as much as the banks were. Triple A rating toxic loans and selling them to anyone and everyone. The amount of pressure they put on us and Greece, Spain and Portugal was a disgrace. Consistently downgrading our banks and causing market turbulence.
We know our banks are in trouble – we dont need a CAAAAAAAAA1 rating to tell us that.
More interestingly, whatever happened to the idea floated a year or two back that an independent rating agency should be created, one that had nothing to do with the past, insider links, and focused only on rating alone, and would not be quite so US-centric?
Perhaps I was just imagining things, just as I once heard a tale that this was a progressive, wealthy and modern country …
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