S&P Cuts Rating on Ireland; Outlook Negative

The 10-year Ireland-to-German bond spread has risen to 318 bps, and is now above the peak during the European crisis in May. The peak in May was 306 bps.

Standard & Poor's said late Tuesday it downgraded Ireland's long-term sovereign credit rating to AA- from AA because of the high cost to prop up that country's financial sector. The outlook is negative. "The downgrade reflects our opinion that the rising budgetary cost of supporting the Irish financial sector will further weaken the government's fiscal flexibility over the medium term," said Trevor Cullinan, an S&P credit analyst, in a statement.