Bailout loan extension 'significant' - Moody's

Updated: Thursday, 07 Mar 2013 18:06

Ratings agency Moody’s has said that Europe’s agreement in principle to consider extending the maturities on some Irish loans is “very significant".

According to news agency Bloomberg, Moody’s lead sovereign analyst Kristin Lindow said the recent Anglo promissory note deal, coupled with the potential extension of other bailout loans, “makes a big difference”.

“We consider this to be another credit positive event for Ireland,” she said.

The European Union’s finance ministers this week agreed to ask the bailout Troika to recommend the “best possible option” for helping Ireland and Portugal’s respective returns to the bond markets.

Five options for Ireland’s bailout loans are currently under consideration, ranging from no extension being given to an extension of over five years.

The EU may consider rescheduling at least €10.5 billion of the loans due to mature in 2015 and 2016, according to Davy.

Moody’s is currently the only of the three main ratings agencies to have Ireland on a non-investment rating, placing it at Ba1 with a negative outlook.

Ms Lindow said the agency was always looking at this and “at some point we will determine if the balance of risks has shifted”, however she said the negative outlook would remain for now.

“If we don’t think we are likely to downgrade within the next 12-18 months, then at that point we would move back to stable. I can’t say when that point would be,” Ms Lindow said.

The yield on Ireland’s bonds maturing in October 2020 fell 3 basis points to 3.72% today.