Ireland's debt has been downgraded to junk status by ratings agency Moody's due to the possibility it may need a further bail-out when its €85 billion European Union and International Monetary Fund rescue package ends.
Moody's lowered the rating from Ba1 to Baa3, or non-investment grade, last night. The European Commission said it was disappointed with the decision. 'It contracts very much with the recent data, which support a return to GDP growth this year, and the determined implementation of the [austerity] programme by Dublin.'
The Irish government said Moody's verdict clashed with that of other ratings agencies. 'We are doing all we can to put our house in order and the progress that we are making is there for all to see,' the department of finance said in a statement.
The downgrade came after Italian and Spanish bond yields hit record highs since the introduction of the euro, and European leaders admitted Greece was set to defaut on its debt burden.