JAKARTA: Moody's Investors Service today downgraded Ireland's foreign- and local-currency government bond ratings by five notches to Baa1 from Aa2 with negative rating. The rating downward revision concluded the review for possible downgrade that Moody's had initiated on 5 October 2010.As quoted from its official website, the rating revision is in line with the guidance that Moody's gave in a comment published on 22 November 2010, in which the rating agency indicated that the most likely outcome of the rating review would be a multi-notch downgrade that would leave Ireland's rating within the investment-grade category.There are three key drivers propelling such downgrade, including the crystallization of bank related contingent liabilities, the increased uncertainty regarding the country's economic outlook and the decline in the Irish government's financial strength.Adding to that, the negative outlook on the rating was based on Moodys view on the risk that the Irish government's financial strength could decline further if economic growth were to be weaker than currently projected or if the costs of stabilizing the banking system turn out to be higher than currently forecast.Moody's today also downgraded Ireland's short-term issuer rating to Prime-2 (commensurate with a Baa1 debt rating) from Prime-1. Ireland falls under the Eurozone's Aaa regional ceilings for bonds and bank deposits, which are unaffected by the Irish government's downgrade.In a related rating action, Moody's has also downgraded by five notches to Baa1 from Aa2 the rating of Ireland's National Asset Management Agency (NAMA), whose debt is fully and unconditionally guaranteed by the government of Ireland.The rating was also based on the review for possible downgrade on 5 October 2010. The outlook on the NAMA rating is negative, in line with the government bond ratings.
In the meantime, the rating downgrade hit EUR/USD which was traded at 1.3331 after moving as low as 1.3233, PT Monex Investindo Futures noted. (T02/NOM)
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