Ireland’s credit rating downgraded to ‘A’ by Standard & Poor's

Credit rating agency Standard & Poor's has downgraded Ireland's short-term and long-term rating to an A.

The long-term rating went from an AA- to an A and the short-term lowered from to an A-1 from an A-1+.

The downgrading is a result of the higher expectancy cost of recapitalizing Irish banks.

The company have said it is still possible that the rating may face further lowering if the EU/IMF bailout or the December 7 budget can not ease the credit crunch.

"The lower ratings reflect our view that the Irish government will have to shoulder additional costs associated with further capital injections into Ireland's troubled banking system," said Standard & Poor's credit analyst Frank Gill.

"We expect the government to be given access to a joint loan programme extended by the EU and the International Monetary Fund (IMF)."

He added, "We think it reasonable to expect that the EU-IMF program currently being negotiated should help Ireland manage its downsizing of the commercial banks' balance sheets."

Gill said his agency does not expect "domestic demand" to be likely until 2012.

"The outlook for future costs to the government from financial retrenchment remains uncertain," Mr Gill said. "In our view, Ireland's banking system will take several years to downsize."