S&P lowers some Irish bank debt

Standard & Poor's said it lowered its ratings on lower tier 2 subordinated debt issued by deposit-taking banks incorporated in the Republic of Ireland and their holding companies, including the lower tier 2 issues of Bank of Ireland (A-/negative/A-2) to BB+ from BBB+, of Irish Life & Permanent plc (BBB+/negative/A-2) to BB from BBB and of Allied Irish Banks plc (BBB+/Negative/A-2) to BB from BBB+.

These rating actions follow the agency's assessment of the likely implications for the Irish banking system of recent statements by the minister for finance and the head of Ireland's financial regulator. According to S&P, the minister reaffirmed the government's stance of not seeking to impose losses on holders of senior debt and noted the government's intent that holders of subordinated debt in Anglo Irish Bank Corp. Ltd. and Irish Nationwide Building Society should be subject to appropriate burden sharing.

S&P said it now views Ireland as a jurisdiction in which the authorities' intent and the legal background indicate a higher default risk on lower tier 2 issues relative to senior debt.

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