S&P cuts Allied Irish Banks

Standard & Poor's said it lowered the ratings on the lower tier 2 subordinated debt issued by Allied Irish Banks plc to D from CCC.

The bank's BBB and A-2 counterparty credit ratings remain on CreditWatch with negative implications, where they were placed in November.

The downgrade action does not affect issuance by Allied Irish Banks that is guaranteed by the Irish government, S&P said.

The downgrade reflects an opinion that this exchange offer is a distressed exchange and a de facto restructuring, the agency said.

There is no related rating action on the counterparty credit ratings because there is no default on non-regulatory capital issues, S&P said.

The agency said it expects to raise the ratings on the instruments subject to the exchange offer to CCC at the end of the offer period. This reflects the fact that the bank still needs to raise further equity capital to reach the end-February target, S&P said.

The counterparty credit ratings on the bank reflect a view on the substantial support that is being provided by the Irish government and central bank authorities, the agency said, adding that its liquidity is considered very weak.

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