RATINGS AGENCY MOODY’S has downgraded Anglo’s senior unsecured and subordinated debt.
Anglo’s unguaranteed senior debt is down from A3 to BAA3, and its dated subordinated debt is now at BA1 from CAA1, according to the Wall Street Journal.
Anglo’s senior debt is now just one notch above junk status.
The government says that the final bill for Anglo will be made known later this week, and the downgrade come on expectations that Anglo will need more government support, the Wall Street Journal reports.
Moody’s top analyst for Anglo told the Financial Times that “Moody’s expects a continued asset quality deterioration in the loan book of Anglo Irish that will require further government support for the bank’s liabilities”. The ratings agency said that it expects the government will favour a wind-down of the bank over a “longer-term horizon”.
Less than two weeks ago, Moody’s downgraded Anglo’s covered bonds from AA2 to AAA, lowering the timely payment indicator from ‘probable’ to ‘improbable’.
Up to €7bn more may be needed to support the nationalised bank, according to Bloomberg sources. Golman Sach’s chief European economist Erik Nielsen told Bloomberg that the Irish government needs to act “urgently to re-gain the love of the market”.
Bloomberg reported today that the ECB considered using the Financial Stability Fund to help Ireland and told other eurozone countries to begin raising money to assist Ireland, before deciding against the plan. The news site was quoting a German publication which cited unnamed sources.
Today’s announcement caused the euro to fall against the dollar as fears for the eurozone’s banking sector grow, Reuters reports. The euro fell to $1.3434 from $1.3465.