This post was written by Seamus Coffey
While of no real significance there have been statements today from both Fitch and Moody’s which merit at least a reading.
First out were Moody’s with their annual credit report. The press release is here. There is no ratings or outlook action with this report but in a phone interview with a company analyst it is reported that he said the company is monitoring its negative outlook on Ireland. Moody’s also removed an explicit PSI warning.
Today’s release was not going to change Ireland’s rating with Moody’s which is Ba1 (‘junk’ status) with negative outlook. Paddy Power are offering a “novelty bet" on Ireland’s credit rating with Moody’s. As recently as August the odds were 9/1 that there would be a ratings improvement by the end of the year. In my opinion a ratings improvement from Moody’s remains unlikely but the odds on it are now in to even money.
This evening Fitch did announce a ratings action with the negative outlook on Irish sovereign bonds improved to stable. Their statement is here. Ireland is at BBB+ with Fitch, three notches above ‘junk’ status. The revision of the outlook is because they judge “that the risks surrounding the adjustment path have narrowed and become more balanced”.
The statement also says that it is not their expectation that there will be “a substantial cut in the public debt through an EU agreement to share the burden on legacy costs of bank recapitalisation”.