Moody’s cuts Ireland’s rating to junk

NEW YORK: Moody's cut Ireland's credit rating to junk on Tuesday, warning that the debt-laden country would likely need a second bailout just the latest move amid heightening concerns about Europe's ability to address its debt crisis and prevent it from spreading.

Moody's move comes a week after it slashed Portugal to junk status with a similar warning about the need for a second round of rescue funds. It reflects the credit rating agency's view that any further financial assistance from Brussels will require private investors to share part of the pain, possibly through a debt rollover or swap.

European finance ministers have acknowledged for the first time that some form of Greek default might be needed to cut Athens' debts, and if that materialised, Ireland's rating, never before in junk territory, could be set for a further round of cuts.

Investors fear a Greece default could ripple through Europe's banking system, putting pressure on stretched public finances in other eurozone countries.

Moody's one-notch downgrade on Ireland weighed on stocks and the euro, which hit its lowest level against the dollar in four months.

The Irish government, which wants to return to debt markets in 2013 when its current European Union-International Monetary Fund bailout runs out, offered a vexed response.

Moody's now rates Ireland Ba1, one notch below former financial market pariah Colombia and two notches below Brazil, and has kept a negative outlook, meaning further downgrades are likely in the next 12 to 18 months. - Reuters