Thursday, November 25, 2010

S&P as Enforcer?

Standard & Poor’s has downgraded Ireland's long-term sovereign rating by two notches to A from AA- and placed Ireland “on credit watch with negative implications,” suggesting the possibility of further downgrades if negotiations on the EU/IMF bailout fail.

Irish debt deserves an A rating, if not a much greater downgrade. But why the aggressive downgrade right now?

It's almost as if S&P is a junior enforcer. Take the EU/IMF deal says S&P or we will really wreck your rating.

And if you play nice:

As Nouriel Roubini notes, all three of the major credit rating agencies—Fitch, Moody's and S&P—have upgraded Turkey's sovereign rating in the period from late 2009 to early 2010, citing the Turkish economy's relative resilience to the global financial crisis as a key factor.

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