Ireland's rating Friday was sliced two more notches by Moody's to just above junk status, from Baa1 to Baa3, which is lower than either Fitch Ratings or Standard & Poor's rates the country.
Reuters reported that Moody's cited Ireland's rising debt level, weak growth prospects and a decline of the government's financial strength as reasons for its action. This came in the wake of a piece of rare good news; on Thursday the government had said it passed a review of its economic progress by its creditors, and Fitch actually upgraded its outlook.
Moody's, however, was not persuaded, and said in a statement, "Should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow. Moreover, a further deterioration in the country's economic outlook would also exert downward pressure on the rating." It also cited uncertainty about the outcome of European Stabilization Mechanism (ESM) solvency tests, and said that Dublin may need to institute more austerity measures so that the country can meet its goals. It also said that increases in European Central Bank (ECB) interest rate hikes could negatively affect its financial position.