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.
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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