Fitch, the credit rating agency, has just downgraded the sovereign debt ratings for the Republic of Ireland from AA+ to AA-.  That is two notches and is proof-positive that the ratings agencies are worried about the hole in Dublin’s finances.

The rating agency Fitch has downgraded Irish sovereign debt from AA+ to AA-. That is two notches (AA+ to AA, then down again to AA-), and while it means our debt is still considered investment grade, it will put increased pressure on our future national debt servicing, buyers will want increased reward to reflect the risk.

This was visible as 10-year Irish bond yields rose, widening the spread against EMU benchmark [German Bunds] by 2 basis points bringing the gap to to 148 basis points after the Fitch news broke.

Five-year Credit Default Swaps, which price the cost of insuring Irish bonds, widened to 144.7 basis points from 142.4 basis points, monitor CMA DataVision said.

More happy news from the emerald isle!