Moody's Investors Service placed the 'Aaa(sf)' ratings on six Irish residential RMBS and one balance sheet CLO on review for possible downgrade.
The rating agency also placed all mezzanine and junior mezzanine ratings on five Irish RMBS tranches on review for downgrade. Moody's previously placed its other ratings on Irish RMBS on review for possible downgrade in July and October 2010.
Moody's said that all ratings on the 22 outstanding Irish RMBS and the only Irish CLO are now on review for possible downgrade.
The rating firm believes that despite the terms set for an Ireland rescue package medium term stress on Irish structured finance deals will be greater than it expected and will probably cause further stress on borrowers. This is because of the austerity measures necessary to manage the increasing government debt burden resulting from the bail-out of the banking sector.
The rating actions reflect Moody's expectation that RMBS and SME corporate performance will deteriorate further given the increasing uncertainty to Ireland's economic outlook. At this time Moody's no longer views 'Aaa(sf)' ratings as achievable for Irish structured finance deals, except, for example, those with very short remaining maturities.
Moody's added that due to the increasingly uncertain economic situation as well as the pending rating actions on the Ireland's sovereign and banking sectors, 'Aaa(sf)' ratings are not currently achievable in Ireland for most structured finance offerings, the rating agency said. This is independent of the credit enhancement made available on these deals.