August 8, 2012 / 5:13 PM / 6 years ago

DBRS keeps Spain, Ireland ratings above key ECB level

NEW YORK (Reuters) - Ratings agency DBRS on Wednesday cut Spain’s rating and confirmed Ireland’s but kept both countries above a key level for European Central Bank collateral requirements.

The ratings agency downgraded Spain to A (low) and held Ireland at the same rating, making DBRS the last of the four agencies used by the ECB to keep the sovereigns at the A level.

A drop below the A level would have led the ECB to charge banks an additional 5 percent penalty for using Spain’s and Ireland’s bonds as collateral.

“It is clearly in the interest of the core of Europe to support the whole of the euro zone,” said Fergus McCormick, the head of sovereign ratings for DBRS.

“We are assuming that there will be continued support of most if not all the members of the euro zone indefinitely. Otherwise these credits would be much lower because they’re under major pressure.”

The agency also downgraded Italy to A from A (high).

The moves by DBRS could come as a major relief for Ireland and Spain, which have been struggling with faltering economies and large debt loads.

For Spain particularly, under pressure from the bond market, holding its rating at the A level could help keep some of those pressures at bay - for now, at least.

Reporting By Luciana Lopez; Editing by Padraic Cassidy and Dan Grebler

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