September 27, 2010 / 9:31 AM / in 9 years

Moody's slashes Anglo Irish senior, subordinated debt

DUBLIN, Sept 27 (Reuters) - Ratings agency Moody’s cut Anglo Irish Bank’s unguaranteed senior debt by three notches on Monday and its subordinated debt by six ahead of moves by Dublin to outline the total cost of bailing out the nationalised lender. Senior government officials have signalled that in doing so a renegotiation of some of the lender’s subordinated paper was possible, but Finance Minister Brian Lenihan has said it was unthinkable that Ireland would default on senior debt.

Moody’s downgraded the bank’s unguaranteed senior debt to Baa3 — just one notch above junk status — from A3 and subordinated notes to Caa1 from Ba1.

The rating agency said that while it still expected the government to support senior debt, it would remain under review for possible downgrade until a decision was made.

The euro to an intraday low against the dollar following the announcement.

“While Moody’s considers the likelihood of the government not supporting this debt to be very small, this risk has been reflected in the three-notch downgrade,” Ross Abercromby, lead analyst for Anglo Irish at Moody’s, said in a statement.

Reporting by Padraic Halpin; Editing by John Stonestreet

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