As has been seen throughout the entire European country debt mess, beginning last Nov with Greece, Moody’s has been playing catch up to both S&P and Fitch in giving their assessment of credit. Their downgrade of Ireland by 1 notch today to Aa2 puts them in line with S&P who downgraded them to that level back in June 2009. Irish debt is trading off and 5 yr CDS is higher but the news is not new to the market. With the IMF threatening to cut off Hungary from getting their allowance because of bad behavior, CDS is higher by 55 bps to 370, the highest since June 4th. The market bright spot in southern Europe continues to be Spain as yields again are dropping with their 2 yr in particular falling to the lowest since mid May as we await Friday’s release of the bank tests. The iTRAXX financial 5 yr CDS ahead of them is quoted at 140 bps, up 1.5 and well off the June high of 205 bps.
