“Portugal downgrade raises fresh concerns over Ireland,” headlines the Irish Times, after credit rating agency Moody’s consigned Portuguese sovereign debt to junk status on 6 July. Following a day of market turmoil in the wake of the downgrade, the notional cost of Irish borrowing has hit new levels, with two-year Irish bond yields rising to 15.30% and 10-year yields to 12.43%. For cash strapped Ireland, forced to quit the bond markets after the €85 billion EU/IMF bailout of 2010, the downgrade makes its mooted return to trading by 2013 all the more difficult. “Although Moody’s insisted last night that it continues to “differentiate significantly” between the weakest euro zone countries, analysts in Dublin said Ireland was likely to be to next see its sovereign debt rating downgraded to junk status.”
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