Ireland is downgraded by S&P

We wrote about this in the past, the risk associated with a ratings downgrade to the country, and here it is laid out in plain English.

A downgrade on our rating from AAA to AA+ has the effect that everybody knows about, raising debt is more expensive, so in the past if we had to pay (for instance) 150 basis points over base to clear bond issuances then a downgrade will have you paying (for instance) 180 basis points as the market views your nation as being a higher risk [bear in mind that AA+ is not a ‘likely defaulter’ rating].

However, this has already been priced into our bonds for the most part as they all had to offer higher than average margins to clear, what the downgrade does do though, and the bit that I don’t see in the press and can’t figure out why, is to cause the enforcement of automatic international treasury rules.

What does that mean? It means that there are institutions the world over that have money …

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Ireland is downgraded by S&P

We wrote about this in the past, the risk associated with a ratings downgrade to the country, and here it is laid out in plain English.

A downgrade on our rating from AAA to AA+ has the effect that everybody knows about, raising debt is more expensive, so in the past if we had to pay (for instance) 150 basis points over base to clear bond issuances then a downgrade will have you paying (for instance) 180 basis points as the market views your nation as being a higher risk [bear in mind that AA+ is not a ‘likely defaulter’ rating].

However, this has already been priced into our bonds for the most part as they all had to offer higher than average margins to clear, what the downgrade does do though, and the bit that I don’t see in the press and can’t figure out why, is to cause the enforcement of automatic international treasury rules.

What does that mean? It means that there are institutions the world over that have money …

Read More