UPDATE 1-Moody's to decide on Ireland rating in December

Published 11/11/2010, 01:45 PM
Updated 11/11/2010, 01:48 PM

* Fiscal plan due this month key for Moody's review

* Ireland borrowing costs soar on debt fears (Adds background, byline)

By Walter Brandimarte

NEW YORK, Nov 11 (Reuters) - Moody's Investors Service said on Thursday it is awaiting the release of Ireland's four-year fiscal plan later this month to decide whether to downgrade the country's credit rating.

"We intend to conclude this review in the course of December," a Moody's spokesman told Reuters.

The ratings agency put Ireland's Aa2 ratings on review for a possible downgrade on Oct. 5, citing the impact of additional bank recapitalization needs, increased uncertainty regarding the economic outlook, and elevated borrowing costs.

Ireland's borrowing costs soared to all-time highs on Thursday, further straining the debt-burdened government, as investors worried about the country's ability to service its obligations.

A possible rating downgrade could send Ireland's debt spreads even higher.

Among the big-three rating agencies, Moody's currently gives Ireland the highest credit rating, eight notches above junk status. Standard & Poor's has the country seven degrees above junk, at AA-minus, while Fitch has it one step below S&P, at A-plus.

Moody's is particularly concerned about Ireland's ability to preserve the government's financial strength in a difficult economic environment.

The four-year financial plan will be key for the government to preserve public finances and bring the deficit below 3 percent of gross domestic product by 2014, according to the agency. (Editing by Leslie Adler)

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