Fitch Downgrades Ireland Credit Rating
By wchung | 12 May, 2026

Ratings agency Fitch cut Ireland’s credit worthiness another notch Wednesday, citing the country’s long fight to emerge from record deficits, the toughest bank-bailout effort in Europe and a lagging economy.

Fitch’s downgrade to A+ from its previous AA- rating follows a similar move earlier this week by rival agency Moody’s. However, both Moody’s and Standard & Poor’s still rate Ireland at the higher grade of AA2 and AA-, respectively.

The downgrade had an immediate negative impact on Ireland’s borrowing costs on international bond markets. The interest rate, or yield, that investors demand to buy Ireland’s 10-year bonds rose to 6.4 percent Wednesday for the first time this week.

Fitch said its downgrade and negative outlook — which places Ireland on review for a potential further downgrade — was a logical consequence of Ireland’s stunning announcements on its debt crisis last week.

Finance Minister Brian Lenihan said Ireland’s deficit this year will rise to a European record of 32 percent of GDP on the back of a bank bailout expected to total at least euro45 billion ($61 billion), and potentially euro5 billion more if the Irish real-estate market doesn’t stabilize. To cope, Lenihan said Ireland in November would publish a four-year deficit-fighting plan and, the following month, unveil a 2011 budget that reduces the red ink by at least euro4 billion, a blow certain to depress Ireland’s already deflated economy.

“The downgrade of Ireland reflects the exceptional and greater-than-expected fiscal cost associated with the government’s recapitalization of the Irish banks, especially Anglo Irish Bank,” said Chris Pryce, director of Fitch’s government debt group. “The negative outlook reflects the uncertainty regarding the timing and strength of economic recovery and medium-term fiscal consolidation effort.”

But Fitch said Ireland has enough cash stockpiled — more than euro34 billion, including its national pension reserves — and borrowing capacity to ride through the crisis, with full funding for government spending already secured through mid-2011.

It noted that, excluding the exceptional bank-bailout costs this year, Ireland’s 2010 deficit is projected to reach 11.9 percent, “a more appropriate measure of the underlying fiscal position.”

SHAWN POGATCHNIK, Associated Press Writer DUBLIN