Ratings agency Moody's warns risk of credit rating downgrade

Michael Noonan

Colm Kelpie

July 15 2013 11:53 AM

GLOBAL ratings agency Moody's has warned a deterioration of the economic outlook could mean Ireland’s credit rating would be at risk of a downgrade.

In its regular market update, Moody's said it remains fundamentally concerned as to when Ireland can regain growth momentum to slash its high levels of debt.

It comes just days after Standard & Poor's raised its outlook for Ireland, but did not change its rating.

The S&P move contrasted with Moody's, which dashed Ireland's hopes of an upgrade earlier this year when it reaffirmed its negative outlook.

“Upward pressure on the rating could develop if the government's continued success in achieving its fiscal consolidation targets, supported by a resumption of sustained economic growth, enables it to reverse the current debt dynamics and enhances its ability to re-access the capital markets on a sustained basis,” the Moody’s update said.

“Moody's would consider a further rating downgrade if the Irish government does not meet its fiscal consolidation goals, postponing the date by which its debt levels would start to decline.

“A further deterioration in the country's economic outlook would also exert downward pressure on the rating, as would a market disruption resulting from an event like a Greek exit from the euro area.”

The warning comes as Finance Minister Michael Noonan negotiates with Europe ahead of a planned exit from the bailout programme.