Moody's Ireland Cut Holds PIIGS Banks Hostage (AIB, IRE, NBG, STD, BBVA)

Banking, finance, and taxes

Published: December 17, 2010 8:35 am

Last Updated: April 28, 2020 1:52 am

Moody’s has been on a warpath this week downgrading the PIIGS. The calls are late. Very late. These should have been about as telegraphed as a replay of a World War II outcome. Moody’s downgrade of Ireland by five notches follows the ‘warning of downgrades’ to Greece and Spain yesterday. In case you don’t expect it, let us just tell you that those ‘warnings’ will result in ultimate downgrades again. This morning’s downgrade is hitting Irish banks and it is acting as a drag against others in the lands of the PIIGS.

Allied Irish Banks plc (NYSE: AIB) is down 5.4% at $1.23 versus a recent low of $0.92 and versus a 52-week low of $0.76. The Bank of Ireland (NYSE: IRE) is 5.6% at $2.53 compared to $1.44 in November.

In Greece, the National Bank of Greece SA (NYSE: NBG) has not yet traded but is indicated lower around $1.83 after a $1.86 close yesterday and versus a 52-week low of $1.65.

Banco Santander, S.A. (NYSE: STD) is down 1% at $10.74 this morning, but that is up from under $10.00 at the end of November. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 0.7% at $10.14 versus $9.21 about three weeks ago.

Our argument is not that these downgrades do not matter. These downgrades are just very late and they could have easily been anticipated by investors.

JON C. OGG

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