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Moody's Cuts Ireland's Credit Rating Ratings agency Moody's has downgraded the Irish Republic's sovereign bond rating to Aa2 from Aa1.
“Today’s downgrade is primarily driven by the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability,” said Moody's lead analyst for Ireland Dietmar Hornung.
The agency said it expects the country's economic growth to be below its historical trend in the next three to five years.
Moody's said the banking and property sectors, which had driven the economy before the global economic downturn, would not contribute strongly to overall growth in coming years.
It also pointed to the country's swelling levels of debt as a reason for the downgrade.
The support provided to the banking system, including the transfer of loans to the National Asset Management Agency, was also cited as a key factor in the rating downgrade. Recapitalisation measures already announced may reach EUR 25 B, the agency said, but Anglo Irish Bank may require further support.
"While we do not expect the government - not even in a moderately stressed scenario — to incur permanent losses in excess of 25% of the country’s 2009 GDP as a result of these obligations, we believe that the uncertainty surrounding final losses would exert additional pressure on the government’s financial strength," the agency said in a statement.
The move comes just over a year after Moody's last downgraded the country's rating. On July 2nd 2009, the agency gave the bonds a Aa1 rating, with a negative outlook.
However, the outlook was changed to stable.
Tags: Moody's, ireland, Irish Republic | 
