Moody's revisits Ireland's ratings

Ireland's standing in the credit markets could take another hit, the ratings agency Moody's warned, as it placed the country on review for a possible downgrade yesterday.

The agency said it was revisiting its Aa2 rating in light of recent news on the bill for bailing out Ireland's troubled banks, the weakness in the wider economy and rising borrowing costs. If it does decide to revise its stance, Moody's said the downgrade was likely to be by one notch.

"Ireland's ability to preserve government financial strength faces increased uncertainty as a result of [these] three main drivers, which together would further increase its debt and aggravate its debt affordability," the agency's lead sovereign analyst for Ireland, Dietmar Hornung, said.

The news comes on the heels of the Irish central bank's decision to downgrade its economic growth forecasts earlier this week. It now expects the economy to grow by just 0.2 per cent this year, compared to 0.8 per cent previously.