The rating agency Moody's Investors Service downgraded, Friday, April 15, two notches note of Ireland's "Baa1" to "Baa3", pushing the island at the lowest possible level for reliable borrowers, because of degradation of the country's economic prospects. The future trend of this note is "negative", which means that Moody's does not degrade further over the medium term.
"The main reason for the downgrade today is the further weakening of the financial soundness of the Irish government, because of sluggish economic activity and the implementation of new commitments to banks," explains agency. The deteriorating economic outlook of the former "Celtic Tiger" due process of fiscal consolidation, further contraction of credit in the private sector and a less favorable environment for interest rates, says Moody's .
The agency said that the tests recently conducted on the banks will lead to an increase in the cost of rescuing the financial system for the Irish state and that this factor is negative for the rating of the country. The day before, another big rating agency, Fitch Ratings, was instead welcomed the stabilization of the Irish banking system and had put forward to maintain its rating to "BBB +" (two notches above the rating from Moody's) After a time thought to lower it.
If the note of Ireland should be lowered by one notch by Moody's, the country would find itself relegated among speculative borrowers, with the key to a sharp rise in rates at which it can obtain financing. Such a scenario is possible if Ireland was not keeping its goal of reducing public debt or whether the country's economic situation would continue to deteriorate, the agency said. 
"The main reason for the downgrade today is the further weakening of the financial soundness of the Irish government, because of sluggish economic activity and the implementation of new commitments to banks," explains agency. The deteriorating economic outlook of the former "Celtic Tiger" due process of fiscal consolidation, further contraction of credit in the private sector and a less favorable environment for interest rates, says Moody's .
The agency said that the tests recently conducted on the banks will lead to an increase in the cost of rescuing the financial system for the Irish state and that this factor is negative for the rating of the country. The day before, another big rating agency, Fitch Ratings, was instead welcomed the stabilization of the Irish banking system and had put forward to maintain its rating to "BBB +" (two notches above the rating from Moody's) After a time thought to lower it.
If the note of Ireland should be lowered by one notch by Moody's, the country would find itself relegated among speculative borrowers, with the key to a sharp rise in rates at which it can obtain financing. Such a scenario is possible if Ireland was not keeping its goal of reducing public debt or whether the country's economic situation would continue to deteriorate, the agency said.
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