Moody's Expects Multi-Notch Downgrade Of Ireland, As Green Party Abdication Sends Irish CDS Wider On Day

Tyler Durden's picture

Earlier today Moody's finally woke up from its slumber, threatening it would do a "multi-notch downgrade, albeit one that would leave the country still with an investment grade rating", which the people who have made a business model of being behind the curve said is now the most likely outcome of the review of Ireland's sovereign credit rating. Moody's (which rates Ireland Aa2 and has the country on review for downgrade) said that an aid package from the European Union and the International Monetary Fund would shift the burden of supporting Ireland's banks onto the Irish sovereign, and would therefore be "a credit negative for Ireland." Apparently bankruptcy is not covered under the "credit negatives" for Ireland. And while what Moody's does or thinks is completely irrelevant, what the Irish Green party (whose prior opinion we presented in a very distinct clip last night) has announced it will quit the Irish government in January, leaving PM Brian Cowen without a majority in the government, and leaving the door open for elections, and thus a complete undoing of the bailout. Looks like yesterday's announcement will be the shortest rescue in history. CDS is already seeing that, as Irish CDS was last seen lifting offers of 520 and wider, after a 507 close on Friday. And Futures already following the action. It will be another busy day for Brian Sack.

On the Green Party abdication:

Ireland’s Green Party will quit the government after next month’s budget is passed and talks with the European Union on an aid plan are completed, leaving Prime Minister Brian Cowen without a majority in parliament.

The Green party plans to support the government’s budget and wants an election in January, leader John Gormley said at a press conference in Dublin today. Irish voters “feel misled” by the government, he said.

Ireland yesterday became the second euro-region state to ask for external help after surging costs to bail out the country’s banks pushed up the budget deficit and eroded investor confidence. The aid, which Irish officials said as recently as Nov. 15 they didn’t need, marks the latest blow to Cowen’s popularity, which has plunged as he raised taxes, cut public workers’ pay and pumped billions of euros into lenders.

“I suppose it’s not very surprising. It’s clear that the public are very fed up,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “We need elections sooner rather than later. It makes sense for them to support the budget and then walk away.”

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Quinvarius's picture

Noise for exiting a trade.

macholatte's picture


New Zealand's double-A credit rating has been put on notice for a possible downgrade.

John McCloy's picture

I'm with you...this bailout either never happens or is reversed. I have the pleasure of working with two Irish citizens who travel home frequently and let me tell you these folks are very astute and aware politcally.
They do not take their recent freedom for granted and I did not even have to explain to this woman the detriments of IMF and ECB involvement.
She and her entire family are aware that this is an atte
pt to socialize the losses of bankers here and other EU members. Luckily the Irish are not as distracted by the smoke and mirrors of reality tv and propaganda mainstream news to the extent we are here in the U.S. These announcements in my opinion are to calm markets te
porarily and gauge public reaction which will be fiercly opposed. Small population and minimal places to hide.

Drachma's picture

Everybody knows the solution to the sovereign debt crisis is...Foundation X. Zero vig and unlimited credit. I think Lord Bloackheath summed it up best:

Drachma's picture

Everybody knows the solution to the sovereign debt crisis is...Foundation X. Zero vig and unlimited credit. I think Lord Bloackheath summed it up best:

sandorgb's picture

if you cram enough debt down people's throats, eventually they will regurgitate.

Ras Bongo's picture

Gap and crap. LOL

M.B. Drapier's picture

Today's lurid rumour:

Fine Gael finance spokesman Michael Noonan said there may be conflict between European officials and the International Monetary Fund the restructuring of Ireland's banks.

Mr Noonan said the IMF may favour more burden sharing with bank bond holders than European officials as a condition of aiding Ireland.

jeff montanye's picture

bank bondholders, stockholders and management should be bearing the burden.  when oh when will this be?

Oh regional Indian's picture

People are actually still paying any attention at all to these ratings agencies. Even after the whole MBS/CDS scam having shown their role for what it is?

Crazy. Short attention span we have.


SheepDog-One's picture

Elections? I'd say what the need in Ireland is riots and the IRA.

spongeBOB's picture

here you go....

"According to RTE, Sinn Fein protestors try to enter Irish government buildings  "