Ratings agency Moody’s Investors Service has downgraded Ireland’s sovereign debt rating to a level just above junk status on the country’s uncertain outlook and lower expectations for the economy, according to The Daily Telegraph. On Friday, the agency reduced Ireland’s debt rating by two notches to Baa3, and kept a negative outlook, warning, “Should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow.” Moody’s cited “weaker economic growth prospects” and “uncertainty” posed by up coming European Union solvency tests.

Meanwhile, yields on 10-year government bonds from Greece, Ireland, Spain, and Portugal all surged on the downgrade, and as German finance minister Wolfgang Schaeuble warned that “additional steps” could be necessary for debt-burdened countries to avoid a restructuring. The Greek Prime Minister, George Papandreou, outlined fiscal plans but delayed the final publication of detailed plans until after the Easter holiday.

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