Brian Lucey is quoted in the Irish Times as saying “Right now we’re seen as being less creditworthy than Peru.”
“Peru, of course, has natural gas, oil and literally mountains of gold. But they can give it to Peru or they can give it to Ireland.”
This is not correct.
The Financial Times (15/9/09) quotes the yield on Irish Government debt at 3.35% for bonds redeemed in January 2014 and quotes the yield on Peruvian Government debt for bonds redeemed one year later (February 2015) as 4.40%. Yields rise as the maturity of the bond extends, hence an equivalent maturity bond from Peru will yield slightly less than 4.4%. but more than on Irish Government debt.
Earlier this year Moody’s reduced Irelands credit rating to AA1 and Standard and Poors reduced Irelands credit rating from AAA to AA+. The Peruvian bond quoted in the above example is assigned a rating by Moody’s of Ba1 and by Standard and Poors BBB-
On these two standard measures of creditworthiness (yield on government bonds and credit rating) Peru is less creditworthy than Ireland.