Thread: Irish bonds cut to junk status on bail-out worries

Ireland's beleaguered economy has suffered another blow after its credit rating was cut to junk status on fears that it will need further bail-outs.

Ireland's rating was lowered to Ba1 from Baa3 on Tuesday night. Photo: AP

By Philip Aldrick and Amanda Andrews
10:30PM BST 12 Jul 2011
51 Comments

The country joins Portugal and Greece to become the third euro-area nation to be reduced to non-investment grade. The downgrade by Moody's came as it emerged European leaders will hold an emergency summit on Friday in an effort to contain fallout from the sovereign debt crisis sweeping the Continent.

Ireland's rating was lowered to Ba1 from Baa3 on Tuesday night. The country, which had a top Aaa rating just over two years ago, lost its investment status after the once booming property market imploded, causing banking collapses requiring huge bail-outs that saw the country's debt surge.

Moody's said that reason for the downgrade was a growing possibility that once the current €85bn European Union/ International Monetary Fund rescue package ends in 2013, Ireland is likely to need further bail-outs before it can return to the bond market.

The European Commission said it "regrets" Moody's decision to downgrade, adding it "contrasts very much with the recent data, which support a return to GDP growth this year, and the determined implementation of the [austerity] programme by Dublin".

Moody's had previously cut Ireland's credit rating two levels on April 15 to the lowest investment grade.
The developments for Ireland came on a second day of turmoil across the Continent during which Italian and Spanish bond yields hit record euro-era highs before suspected interventions by the European Central Bank (ECB) settled nerves, and European ministers admitted an orderly default on Greek debt is actively being considered.

Markets tumbled for a third consecutive day, although deep early losses were later pared back by moves to stop bond vigilantes targeting Spain and Italy.
George Osborne, who is not expected at Friday's meeting, urged Europe to step up its efforts after yesterday's meeting of finance ministers, saying: "The time has come for decisive action to address the crisis in the eurozone and prevent market uncertainty doing real damage to the world economy."
In a concerted effort to allay concerns, Italy pledged to speed up plans for €40bn of austerity measures, the euro group committed to ease the terms of rescue packages for Greece, Ireland and Portugal, and traders said the ECB had gone into the markets and bought peripheral nation's sovereign debt.
Despite their efforts, the euro slumped 0.4pc to $1.3986 and a record low against the Swiss franc as investors fled to safe havens. The FTSE 100 fell 1pc , Germany's DAX lost 0.8pc and France's CAC 40 eased 1pc.
The desperate measures were taken after the bond markets turned their sights on Spain and Italy, which Capital Economics warned "could mark the beginning of the end for the single currency union". Italy faces a key test at a bond auction on Thursday and Spain faces a similar test the following week.
On Tuesday morning, at the height of the panic, 10-year yields almost touched 6pc. Spain’s followed Italy’s up to 6.2pc. Both were euro-era records. In response, Mr Berlusconi accelerated plans to approve the €40bn budget cuts. Yields later dropped back to close down 12 points at 5.56pc for Italy and down 17 points at 5.81pc for Spain.
Italy’s action came as the Dutch finance minister Jan Kees de Jager said an orderly default for Greece “is not excluded any more”. EU economic affairs commissioner Olli Rehn added that the €440bn European Financial Stability Facility (EFSF), the area’s rescue fund, may buy back sovereign debt in the secondary market – a proposal backed by Mr Osborne.
Greek and Irish ministers also welcomed the euro group’s commitment to ease the terms of the original bail-outs.

Irish bonds cut to junk status on bail-out worries - Telegraph

Originally Posted by Bangyai

Greek and Irish ministers also welcomed the euro group’s commitment to ease the terms of the original bail-outs.

So they are avoiding formal default by delaying the repayments they are unable to make.

Default

Dont laugh! I've all ready lost mi shirt. Looks like I am going to loose mi shorts as well.

We already have another thread open on this. Moodys are a bunch of fucking comedians and no-one takes them seriously.

Originally Posted by Sailing into trouble

Dont laugh! I've all ready lost mi shirt. Looks like I am going to loose mi shorts as well.

This thread is better without pictures.

Originally Posted by harrybarracuda

We already have another thread open on this. Moodys are a bunch of fucking comedians and no-one takes them seriously.

The Portugese have their own thread. I though the Irish might feel miffed if they didn't get their own . After all , they have little enough as it is.

Moodys were giving them a triple A rating a couple of years ago when even fucking bank tellers where talking about a property bubble ready to bust..
They have about as much credibilty left as FOX news in my book. At least Ireland
are taking some serious measures to deal with the situation, unlike Greece, and to some lesser extent Portgual.

Originally Posted by Bangyai

I though the Irish might feel miffed if they didn't get their own . After all , they have little enough as it is.

Even less now...21 minutes since that post.

Originally Posted by Bangyai

The Portugese have their own thread. I though the Irish might feel miffed if they didn't get their own . After all , they have little enough as it is.

The italians have got their own thread too, and with 23.5% of the Eurozone debt, valued at 120% of their GDP, they deserve it.

https://teakdoor.com/world-news/93857...-eurozone.html (Italy MPs struggle to hold back eurozone debt crisis)

Originally Posted by koman

Moodys were giving them a triple A rating a couple of years ago when even fucking bank tellers where talking about a property bubble ready to bust..
They have about as much credibilty left as FOX news in my book. At least Ireland
are taking some serious measures to deal with the situation, unlike Greece, and to some lesser extent Portgual.

people make the mistake that rating agency have a big magic ball and can make bold predictions,

they can only make educated guess, that's all there is, and it's clearly disclosed in their literature and should be taken as such

only idiot and greedy investors will take their ratings at par value

Originally Posted by Butterfly

Originally Posted by koman

Moodys were giving them a triple A rating a couple of years ago when even fucking bank tellers where talking about a property bubble ready to bust..
They have about as much credibilty left as FOX news in my book. At least Ireland
are taking some serious measures to deal with the situation, unlike Greece, and to some lesser extent Portgual.

people make the mistake that rating agency have a big magic ball and can make bold predictions,

they can only make educated guess, that's all there is, and it's clearly disclosed in their literature and should be taken as such

only idiot and greedy investors will take their ratings at par value

They don't make mistakes, they are corrupt and lie about ratings for money.

Originally Posted by harrybarracuda

Originally Posted by Butterfly

Originally Posted by koman

Moodys were giving them a triple A rating a couple of years ago when even fucking bank tellers where talking about a property bubble ready to bust..
They have about as much credibilty left as FOX news in my book. At least Ireland
are taking some serious measures to deal with the situation, unlike Greece, and to some lesser extent Portgual.

people make the mistake that rating agency have a big magic ball and can make bold predictions,

they can only make educated guess, that's all there is, and it's clearly disclosed in their literature and should be taken as such

only idiot and greedy investors will take their ratings at par value

They don't make mistakes, they are corrupt and lie about ratings for money.

Does this apply to all our "financial advisers" on T.D.

Do you listen to any of them?

Originally Posted by harrybarracuda

They don't make mistakes, they are corrupt and lie about ratings for money.

do you actually read what you post ?

These countries all need to learn from Iceland, they had a AAA rating just a few months before the shitt hit the fan there, no one thought they would be able to borrow again, yet their latest bond issue was more than twice over suscribed.

Why they just don't all default and tell the banks to fok off i have no idea and just start to rebuild from a low base as opposed to piling more and more misery on there citizens i have no idea.

Originally Posted by Butterfly

Originally Posted by harrybarracuda

They don't make mistakes, they are corrupt and lie about ratings for money.

do you actually read what you post ?

We've already discussed this, Butters. The only reason the Feds can't nail the fuckers is that their crimes are outside US jurisdiction. Or have you, with the attention span of a hyperactive gnat, forgotten that thread already?

Originally Posted by buriramboy

These countries all need to learn from Iceland, they had a AAA rating just a few months before the shitt hit the fan there, no one thought they would be able to borrow again, yet their latest bond issue was more than twice over suscribed.

Why they just don't all default and tell the banks to fok off i have no idea and just start to rebuild from a low base as opposed to piling more and more misery on there citizens i have no idea.

I think Iceland was a bit different. It was not a sovereign debt problem, it was a bank failure. They had a referendum on paying off the offshore punters who lost their money (mostly UK and Netherlands) but the clever Icelanders said "fuck the offshore punters" they gambled and they lost....we are not bailing them out. Still they have lost too....the average Icelander's net worth took a pretty serious shit kicking.

Originally Posted by harrybarracuda

The only reason the Feds can't nail the fuckers is that their crimes are outside US jurisdiction. Or have you, with the attention span of a hyperactive gnat, forgotten that thread already?

right because S&P and Moodys are not based in the US

you do realize that S&P analysts are usually bound to a certain code of conducts that goes beyond those dictated by any Federal government ?

the credit enhancement of the MBS we saw in the years before 2008 was simply an accepted methodology and an issued opinion

Originally Posted by Butterfly

Here we go again...

Here is a graph showing the relative debts, relative to their GDP.

^ these are for the total Notional on outstanding CDS contracts,

a bit misleading, as it must include corporate issuers, not only US Treasury or Sovereign Debt

and if it includes corporate issuers, then it's definitely below reality, and it's basically meaningless

Everybody knows the ratings agencies were sucking cocks and selling ratings to the highest bidder, even when they knew that the stuff they were recommending was a pile of shit.

Originally Posted by Butterfly

it's basically meaningless

The real graph would need a 56" screen though

Originally Posted by harrybarracuda

Everybody knows the ratings agencies were sucking cocks and selling ratings

their business is to sell ratings, that's no secret, that's exactly what they do, but they don't sell AA rating without justification. They sell an opinion, that's basically their line of business.

MBS tranches had to go through certain adjustments before they were issued AA

again, the ratings are indicators, only clueless dumb fucks and greedy bankers would take them at par value

so in short, the average clueless dumb fuck like yourself is no better than the greedy banker

Originally Posted by OhOh

Originally Posted by Butterfly

it's basically meaningless

The real graph would need a 56" screen though

if you took all outstanding debt of all issuers, it would be like 1000%

but again, would you include your relatives debt into your Income to Debt ratio ? probably not,