Credit rating agency Fitch downgraded Ireland’s score to BBB+. Needless to say, this came as no surprise. Credit rating agencies such as S&P, Moody’s and Fitch are always late. The real credit rating is better reflected in CDS – Credit Default Swaps. It’s no news that the Irish sovereign is having trouble, due to its banks.
Speaking about defaults and banks, the Bank of Ireland (nyse:ire) announced a haircut to bondholders – burden sharing if you wish. This adds to the restructuring in Anglo Irish and to the fears that also senior debt holders will be subject to the razors. They’re safe, at least for now, and only junior bondholders suffer at the moment.
As the Irish crisis has been resolved, at least for now, so Fitch left the outlook on “stable”.
The country that will gather attention soon is Portugal. The ECB focuses its efforts on Porutgal – it is marked as the next domino in the European debt crisis, and the last country that can be saved using the current money allocated to the EU / IMF fund. Spain is too big to bail.
EUR/USD is trading lower today, but this move began hours before the announcement by Fitch. Euro/Dollar finds support at 1.32 at the moment.
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