Irish Banks Slip on S&P Index Amid Bailout Woes

The Standard & Poor's credit ratings agency downgraded Ireland's banks as speculation mounts that an EU-IMF bailout of Ireland could require senior bondholders to help cover the losses.

New York-based S&P said in a statement Friday it was lowering Anglo Irish Bank six notches to a junk-bond B grade. It also cut the ratings on Bank of Ireland and Allied Irish Banks one notch each to BBB+ and BBB, respectively.

The agency says bonds issued by Anglo are particularly at risk of being discounted as part of the EU-IMF rescue mission to Dublin. It says Ireland "may be forced to reconsider its current supportive stance toward Anglo's unguaranteed debt."

Junior bondholders at Anglo already have been forced to accept losses of 80 percent to 95 percent on their loans.