Moody’s have downgraded Irish sovereign debt again, this time to Aa2 “blaming banking liabilities, weak growth prospects and a substantial increase in the debt to GDP ratio.”
The FT’s Alphaville people are inclined to blame it on Dan Boyle for his comments to the Sunday Tribune (reported internationally with an interesting headline by Reuters.) I think the FT people are pulling our legs a little attributing such importance to Dan. However, the comments did seem a little strange.
The bond market reaction has been fairly muted, with the ten year sovereign yield ticking up only a few points. However, yields at 5.5 percent are hardly satisfactory. If sustained over a long period, interest rates of this type would make it very difficult to stabilise the fiscal debt.