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Moody's downgrades Irish banks

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Moody's downgraded the creditworthiness of six Irish banks

Moody's downgraded the creditworthiness of six Irish banks

Moody's downgraded the creditworthiness of six Irish banks

Ratings agency Moody's has downgraded the creditworthiness of six Irish banks as politicians nearing the General Election argued about when, or whether, the banks will get a further capital injection.

Moody's Investors Service cited doubts over whether the banks will get a new cash infusion which was due at the end of the month.

The Government has put off the issue until after the February 25 election, and opposition parties most likely to form the next government oppose further aid for banks.

Ratings for the banks' unguaranteed senior unsecured debt were cut to "junk" status for Bank of Ireland, Allied Irish Banks, EBS Building Society and Irish Life&Permanent.

The long-term unguaranteed senior unsecured debt of Anglo Irish Bank and Irish Nationwide Building Society, already rated as "junk", were downgraded further.

Finance Minister Brian Lenihan announced on Wednesday that the Government would not be putting up to 10 billion euro into the banks before the election, saying that the outgoing government no longer had a mandate to do so.

However, Mr Lenihan said he would advance the cash if the leaders of Fine Gael and Labour - which are favoured to form the next government - would formally request that the money be committed.

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Fine Gael and Labour both say they intend to renegotiate terms of the 67.5 billion euro bailout the Government received from the European Central Bank and International Monetary Fund last year.

Although there are questions about whether the bailout can be renegotiated, Moody's said the political jousting had raised questions about whether an Irish government would continue to support the banking industry.

"Moody's notes that the Irish government's willingness to provide support beyond what has been committed to date has become far less certain and more difficult to predict, resulting in a significant lowering of our support assumptions for all domestic Irish banks, and the subsequent downgrades of the unguaranteed senior unsecured debt ratings," the ratings agency said.


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