The crisis in the eurozone deepened yesterday as Ireland’s credit rating was cut to just one rung above ‘junk’ status.
One of the world’s biggest ratings agencies cut Dublin’s status by two grades and warned further reductions may follow – potentially barring investors from buying Irish government bonds should the rating fall further.
Moody’s Investors Services said the Dublin government could struggle to cut the budget deficit because of weaker than expected economic growth.
The downgrade was a bitter blow for Ireland’s battered economy and came amid fresh worries about state debt levels in Greece.
Yesterday, the euro also fell against the dollar as the debt crisis blighting the Continent worried the financial markets.
Philippe Gijsels, head of research at investment bank BNP Paribas, said: ‘It once again shows that the troubles facing the eurozone are not completely behind us and may resurface at any given point.’
The Irish cut, from Baa1 grade to Baa3, increases borrowing costs for a country already struggling to pay interest on its debts.
It leaves Ireland on the last ‘investment grade’ credit score and on the verge of a ‘junk’ rating.
Such a rating would prevent some investors from buying Irish government bonds, making it even harder for the country to borrow.
Moody’s warned that Ireland faces ‘weak economic growth prospects’ due to draconian austerity measures and this month’s interest rate rise by the European Central Bank.
As Europe struggles, though, China continues to show economic strength.
Its economy grew by almost 10 per cent in the first three months of this year.
The success is remarkable given that Beijing has been putting up its interest rates, which usually dampen demand.
Source: http://www.dailymail.co.uk
One of the world’s biggest ratings agencies cut Dublin’s status by two grades and warned further reductions may follow – potentially barring investors from buying Irish government bonds should the rating fall further.
Moody’s Investors Services said the Dublin government could struggle to cut the budget deficit because of weaker than expected economic growth.
The downgrade was a bitter blow for Ireland’s battered economy and came amid fresh worries about state debt levels in Greece.
Yesterday, the euro also fell against the dollar as the debt crisis blighting the Continent worried the financial markets.
Philippe Gijsels, head of research at investment bank BNP Paribas, said: ‘It once again shows that the troubles facing the eurozone are not completely behind us and may resurface at any given point.’
The Irish cut, from Baa1 grade to Baa3, increases borrowing costs for a country already struggling to pay interest on its debts.
It leaves Ireland on the last ‘investment grade’ credit score and on the verge of a ‘junk’ rating.
Such a rating would prevent some investors from buying Irish government bonds, making it even harder for the country to borrow.
Moody’s warned that Ireland faces ‘weak economic growth prospects’ due to draconian austerity measures and this month’s interest rate rise by the European Central Bank.
As Europe struggles, though, China continues to show economic strength.
Its economy grew by almost 10 per cent in the first three months of this year.
The success is remarkable given that Beijing has been putting up its interest rates, which usually dampen demand.
Source: http://www.dailymail.co.uk
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