Friday, April 15, 2011

Ireland bonds downgraded, reaching "junk bond" status swiftly

A Moody's downgrade and growing speculation Greece may eventually restructure its debt took the shine off Ireland's thumbs-up from the EU and the IMF on Friday for its efforts to claw its way back from crisis.

Dublin's creditors said the euro zone struggler had passed the first quarterly review of an 85 billion euro ($123 billion) bailout package but warned the new government that challenges remained, including spluttering growth.

"This program is a lifeline for Ireland," Ajai Chopra, the IMF's head of mission for Ireland, told a news conference.

"(But) this crisis will not be over till we see jobs coming back."

The IMF this week cut its 2011 forecast for Irish gross domestic product (GDP) growth to 0.5 percent from 0.9 percent and said unemployment would hit 14.5 percent, from 13.5 percent anticipated previously.

Moody's also cited Ireland's weaker growth prospects when it cut the country's rating by two notches earlier on Friday to the verge of junk status and kept its outlook on negative, meaning the next move could also be down. (read more)