AAA in danger as Ireland tops the high risk league

[Joanne98]

By Ailish O'Hora Business News Editor


Saturday January 31 2009

The cost of hedging against losses on Ireland's government debt climbed to the highest in the euro region, surpassing Greece's sovereign bonds, according to new figures on a day that rating agency Moody's warned that the country is in danger of losing its prized AAA sovereign debt rating.

Contracts on Ireland rose two basis points to 262.5, compared with 255 for Greece, according to CMA Datavision.

Credit-default swaps on Ireland also cost more than contracts on the debt of Chile, the Czech Republic, Israel, Malaysia, Saudi Arabia, Thailand and China, according to credit-default swaps.

Credit-default swaps, contracts conceived to protect bond holders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent, should a company or country fail to adhere to its debt agreements.

Outlook

Rating agency Moody's said that its decision to change the outlook to "negative" from "stable" on the debt rating reflects its view that "the current economic crisis is likely to significantly affect Ireland's economic strength and government financial strength for the years to come -- both in absolute terms and relative to the country's rating peers".

http://www.independent.ie/business/irish/aaa-in-danger-as-ireland-tops-the-high-risk-league-1622466.html

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