European finance ministers acknowledged that some form of default was likely, and this is what seems to have prompted Moody’s to take the downgrade decision. The Irish government reacted with predictable dismay. Moody’s rating for Ireland is now Ba1 – one notch above Portugal, and as Reuters reminds us, also below Columbia’s.

The news agency also has an interview with Dietmar Horning, a Moody’s credit rating analyst, who confirmed that the present EU policy stance is directly linked to the ratings decisions. While the eurozone was ready to provide liquidity support, there is a risk that Ireland, Portugal and Greece would be unable to return to international capital markets once their current bailout programmes expire.

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