Ireland??s sovereign credit ratings were cut for the second time in three months on Monday amid heightened concern about the soaring cost of bailing out the country??s ailing banking sector.
Standard and Poor??s cut Ireland??s long-term sovereign credit ratings to double-A with a negative outlook. It was previously double-A plus. The country lost its triple-A rating in March.
The ratings agency warned that Ireland could suffer further downgrades should the banking system deteriorate further.
It said in a statement: ??We have lowered the long-term rating on Ireland because we believe that the fiscal costs to the government of supporting the Irish banking system will be significantly higher than what we had expected when we last lowered the rating in March 2009, and, consequently, that the net general government debt burden will also be significantly higher over the medium term.?
The cost to insure Irish government bonds against default rose by 10 basis points to 224bp. This means it now costs ?224,000 for every ?10m of debt to insure Irish government bonds against default.
However, 10-year Irish government bond yields remained steady at 5.6 per cent.
The move by S&P follows a recent announcement from Anglo Irish Bank that its losses were at the upper end of the ratings agency??s expectations, meaning it needs a larger capital injection than expected.
