Irish Bonds Slump After S&P Cuts Rating One Step on Banks

Irish bond yields jumped to the highest since May after Standard & Poor’s cut the country’s credit rating one step to AA- on concern the rising cost of supporting its struggling banks will swell the budget deficit.

S&P increased its estimate for recapitalizing the banking system to as much as 50 billion euros ($63 billion) from a previous estimate of as much as 35 billion euros. Ireland’s rating, now the lowest since 1995, is still one level better than Italy’s and three above Portugal’s. It is seven steps higher than Greece’s junk status.