Moody's cuts Irish debt rating to junk status

Moody's said it was increasingly likely that Ireland would need further rounds of official financing

Ratings agency Moody's has cut the Republic of Ireland's debt rating to junk status.

Moody's said its decision was based on the "growing possibility" that Ireland would need a second bail-out before it can return to capital markets.

The current European Union and International Monetary Fund support programme is due to end in late 2013.

It comes at a time when markets fear the debt crisis in the eurozone could spread to Italy and Spain.

Ireland, Greece and Portugal have all been downgraded by ratings agencies several times in recent months.

Last week, the European Commission raised the issue of the "appropriateness of behaviour" of agencies, and Greek Foreign Minister Stavros Lambrinidis said the agencies had exacerbated an already difficult situation.

In its latest downgrade, Moody's cut Ireland's ratings by one notch to Ba1 from Baa3.

And the agency warned that further downgrades were possible if the Irish government failed to meet its deficit reduction targets, or if Greece were to default, thereby causing further market disruption.