The rating agency Moody's downgraded two notches Friday note of Ireland, making it the lowest level for a reliable borrower. The threat of a debt restructuring Irish swells.
Irish debt into the red zone. Friday, ratings agency Moody's Investors Service has indeed lowered the rating two notches from Ireland to "Baa1" to "Baa3," relegating the country to the lowest level possible for reliable borrowers. In other words, the last step before investor confidence can evaporate to finish. And Moody's notes that this degradation is accompanied by a 'Negative' outlook, leaving the door open for a future other degradation, although this decision should not intervene "in the medium term."
If a new downgrade of its debt were to be decided, the country is indeed ranked among the borrowers may not honor their debts. Ireland would therefore its sovereign bonds classified as "junk bonds" - or junk bonds, and would have the greatest difficulty to borrow in the markets. And a debt restructuring would be necessary.
The bailouts are connected, difficulties remain
This decision was taken by the rating agency because of the deteriorating economic outlook of the island. Paralyzed by a financial crisis, Ireland has been trying for two years to improve its economic situation. She suggested early April fifth bailout of its banking system, in great difficulties, which must be recapitalized to the tune of 24 billion euros.
An austerity plan aimed at reducing the public deficit to 3% of Irish GDP in 2015 from 9.6% in 2010 was also adopted by the countries before the early elections of February 25 to keep its promises to the IMF International and the European Union that have provided aid to 85 billion euros.
A new recession
Despite these efforts, economists' forecasts remain bleak. Last week, the Central Bank of Ireland has revised down its growth expectations for this year: Ireland's GDP should grow it as 0.9% in 2011, 0.1 percentage point less than its initial forecast , made in January. It also lowered its expectation of s croisance 2012, from 2.3% to 2.2%.
It also gave the term "recession" on the current year, after the GDP of Ireland has declined for three consecutive years, falling by 1% in 2010, 3.5% in 2008 and 7.6% in 2009. The IMF has also produced a report on the status of the Irish economy and its prospects, to be published that day.
Corruption, the housing bubble and lax financial regulation that boosted the country's growth until the outbreak of the financial crisis in 2007, may continue to encumber the Irish economy for many years.
