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Moody’s cuts Ireland’s sovereign rating by one notch to Aa1 from Aaa; Outlook Negative

Rationale behind the downgrade stems from three key drivers of our credit analysis regarding debt: affordability, finance-ability and reversibility — which for Ireland are weakened as compared to Aaa peers.

Negative outlook reflects the risk of a further gradual deterioration in terms both of debt affordability — the share of government revenues used for interest payments — and finance-ability — the cost at which Ireland can raise further debt.

Moreover, Ireland’’s ability to reverse the negative debt dynamics in a non-supportive global environment will be tested. Debt dynamics will remain unfavourable for several years, and, in Moody’’s opinion, downside risks outweigh upside risks in the near to medium term. The pronounced weakness in the economic activity has been translating into a severe deterioration of Ireland’’s public finances, and the country is set to emerge from the current economic crisis with a considerably higher debt burden for the foreseeable future (Source: Moody’s)