Tuesday 24 April 2018

Anglo debt rating cut to 'junk' by S&P

Anglo Irish Bank had its long- term counterparty credit rating lowered to below investment grade by Standard & Poor’s, which cited concerns about sovereign support for the bank.

S&P lowered the lender’s rating six levels to B, or junk, from BBB, it said in a statement today. The bank remains on CreditWatch with “negative implications,” S&P said.

“The Irish government may be forced to reconsider its current supportive stance toward Anglo’s unguaranteed debt,” the ratings company said in the statement. “We consider Anglo to be of lower systemic importance.”

Anglo, which the government nationalised in January 2009, may cost as much as €34.3bn to rescue, Finance Minister Brian Lenihan said on September 30.

The Government is in talks with the European Union and the International Monetary fund for a bailout of about €85bn, Taoiseach Brian Cowen said this week, after problems at the nation’s lenders overwhelmed the state’s finances.

Anglo Irish Chairman Alan Dukes said yesterday the bank lost about €12bn of deposits this year, as customers pulled money out of lenders amid the country’s debt crisis.

Anglo is seeking to cut as much as €1.7bn from its bill to the state by buying back subordinated bonds at an 80pc discount to par.

S&P also lowered the long-term counterparty credit rating on Allied Irish Banks, Bank of Ireland, and Irish Life & Permanent by one level, and cut ratings on the senior and subordinated debt of the banks.

Moody’s Investors Service placed the ratings of Irish lenders, including Anglo Irish, under review yesterday before a probable “multi-notch” downgrade of the sovereign.

Bank of Ireland and Allied Irish plunged in Dublin this week as the country’s financial authorities prepared further capital injections into the banks.

Bank of Ireland may fall under majority state control in less than two years, two people familiar with the matter said this week, and the Government may increase its stake in Allied Irish to 99.9pc, RTE said November 23.

Bloomberg

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