Fitch cuts Ireland's debt ratings

6th October 2010, Comments 0 comments

Fitch credit agency cut its ratings on Ireland's debts on Wednesday, citing the unexpectedly high cost of banking bailouts and an uncertain economic outlook.

The blow fell on Ireland the day after another leading agency Moody's warned that it might downgrade Irish debt.

Ireland is fighting out of a debt crisis, which it said had threatened to cause national insolvency, and faces a public deficit this year of about 32 percent of output, or 10 times the EU limit.

A debt downgrade tends to raise the cost of borrowing for a country on the international sovereign bond market.

Fitch said in a statement that it had cut Ireland's long-term foreign and local currency issuer default ratings to 'A+' from 'AA-', adding that the outlook was negative.

Fitch has also cut Ireland's short-term foreign currency issuer default rating to 'F1' from 'F1+' previously.

"The downgrade of Ireland reflects the exceptional and greater-than-expected fiscal cost associated with the government's recapitalisation of the Irish banks, especially Anglo Irish Bank," said Chris Pryce, director in Fitch's sovereign group.

"The negative outlook reflects the uncertainty regarding the timing and strength of economic recovery and medium-term fiscal consolidation effort."

© 2010 AFP

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