Ireland downgraded by S&P (out Tues night) – Standard & Poor’s Ratings Services said today that it lowered its long-term sovereign credit rating on the Republic of Ireland to ‘A’ from ‘AA-’ and its short-term rating to ‘A-1? from ‘A-1+’. At the same time, Standard & Poor’s said that it placed both the short- and long-term ratings on CreditWatch with negative implications. “The lower ratings reflect our view that the Irish government will have to shoulder additional costs associated with further capital injections into Ireland’s troubled banking system.
Irish Banks – S&P To Assess Impact Of Irish Downgrade On Banks – The consensus is that the fortunes of the Irish banking system have become very closely intertwined with those of the Irish sovereign and that the sovereign downgrade could have a negative impact on the creditworthiness of the four rated domestically owned Irish banks, namely Allied Irish Banks PLC (BBB+/Negative/A-2), Anglo Irish Bank Corp. Ltd. (BBB/Watch Neg/A-2), Bank of Ireland (A-/Negative/A-2), and Irish Life & Permanent PLC (BBB+/Negative/A-2). S&P
Ireland – PM Cowen has refused to accelerate the publication of the country’s budget; Cowen says it will still be presented to parliament on Dec 7. He reiterated his promise to call elections after the budget is passed. A near-term attack on Cowen’s leadership appears to have fizzled out for the near-term. Irish Times.
Irish corporate tax rate – the country may wind up keeping its 12.5% corporate rate and instead raise revenues by imposing a levy on its banks. Dublin’s overall tax collections would rise, but w/the banking industry bearing the higher rates. Irish Times.
Ireland – as expected, the country will lay out a 4-year austerity program today designed to save EU15B. There remain calls for the government to accelerate the publication of its next budget, which isn’t forecasted to be presented to the Parliament until 12/7. Reuters
Ireland bailout size – this was out during NY trading on Tues – European officials forecast that Ireland will need a rescue package amounting to EU85B (w/EU35B going to its banks and EU50B going to help the government). PM Cowen says the EU85B has been discussed but that nothing has been decided. Bloomberg
Irish Banks – Ireland’s banks may receive a cash injection as soon as this weekend according to a report in the Irish Independent; “urgent action to keep banks afloat will be taken in the next 72 hours”. AIB and Bank of Ireland will effectively become nationalized. “High level talks are underway to pump extra cash into the banks before the weekend”. Irish Independent.
Bank of Ireland – the Irish government is poised to take a majority stake in the lender, which will leave the country w/o any independent large banks; the equity stake will come as a result of the recapitalization BoI will undertake as part of the bailout talks now underway between Dublin and the EU/IMF – FT
Ireland/UK – Britain’s PM Cameron has warned that the Irish crisis risks pushing a “huge” influx of Irish migrants into the UK. Cameron hinted that this fear has prompted his decision to contribute financially to the Irish bailout – London Telegrap