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Ireland likely to need further bailout funds - Moody's
November 14, 2012 / 11:02 AM / 5 years ago

Ireland likely to need further bailout funds - Moody's

DUBLIN (Reuters) - Ireland will need more bailout funds when its current programme ends next year, according to Moody‘s, the only credit-rating agency to have downgraded the country to junk.

A Moody's sign on the 7 World Trade Center tower is photographed in New York August 2, 2011. REUTERS/Mike Segar

Ireland was the first bailed-out euro country to make a successful return to borrowing on financial markets, enabling it to slice around 10 billion euros ($13 billion) off its post-bailout funding requirements, but Moody’s said on Wednesday it might still need more precautionary loans.

Most analysts believe that having progressively hacked away at a January 2014 ‘funding cliff’ - the only bond redemption due in the 12 months following its aid programme - Ireland can raise enough cash to cover the rest of its funding for the year.

However Moody‘s, which stripped Ireland of its investment grade status in July last year, said a number of key factors still supported its junk rating of the country.

“Ireland has made preliminary steps in an attempt to return to markets on a sustained basis, from which it had been excluded since October 2010,” Moody’s said in its annual credit report on Ireland.

“The rating agency expects that the end of Ireland’s current EU/IMF support programme at year-end 2013 will prompt the need for official financing being available, possibly in the form of a precautionary programme.”

The government has insisted it will not need a second bailout while five out of six economists polled by Reuters in September said they did not think a second aid programme would be necessary.

Ireland’s government debt is nevertheless precariously poised to peak at around 120 percent of gross domestic product (GDP) next year and Moody’s said its Ba1 rating reflected a big deterioration in the government’s financial strength following a costly bank bailout and severe economic contraction.

S&P and Fitch still rate Irish debt three notches above junk, although all three have Ireland on a negative outlook.

Moody’s said its outlook reflected the risks to the country’s deficit-reduction plan from continued weakness in the Irish economy and complications wrought by the broader euro area debt crisis.

The ratings agency said the comments, made in its annual report, do not constitute a rating action.

($1 = 0.7867 euros)

Reporting by Padraic Halpin; Editing by Ruth Pitchford

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