Arab Today, arab today moody\s raises ireland rating to investment grade baa3
Last Updated : GMT 06:37:29
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Arab Today, arab today

Moody\'s raises Ireland rating to investment grade Baa3

Arab Today, arab today

Arab Today, arab today Moody\'s raises Ireland rating to investment grade Baa3

Dublin - AFP

Moody's raised Ireland's sovereign debt rating on Friday, pulling it out of junk territory to an investment-grade Baa3 in recognition of the eurozone country's exit from a huge EU-IMF rescue programme. One month after Ireland reclaimed its economic independence, the ratings agency also placed the country on a positive outlook, citing the economy's growth potential and improved debt outlook. The one-notch ratings increase from Ba1, which had weighed on Ireland's ability to raise funds on capital markets, was tied to a recent rise in economic growth. Moody's lead analyst for Ireland, Kristin Lindow, said the positive outlook suggested improved sentiment for the cash-strapped eurozone nation. "The upgrade reflects the growth potential of the Irish economy which together with the fiscal consolidation, expected to continue over the next few years, will help bring down the very high debt levels," Lindow told AFP. Moody's noted that Ireland exited its programme of support from the European Union and the International Monetary Fund on December 15 "on schedule, with improved solvency and restored market access." "Its ability to do so without a precautionary credit line reflects that the government's reform agenda stayed largely on track" despite challenging economic conditions inside and outside the country, the agency said. Irish Finance Minister Michael Noonan welcomed the ratings upgrade as proof of the changes made since the global financial storm in 2008 brought the once booming 'Celtic Tiger' economy to its knees. "The decision by Moody's to upgrade Ireland's credit rating reflects the significant progress that has been made in stabilising the public finances, restructuring the banking sector and, most importantly, growing the economy and creating jobs," he said in a statement. "Ireland is now rated at investment grade by all of the major credit rating agencies, highlighting the major improvement in investor sentiment towards Ireland." Analysts said this would now increase the possibility of further investment in Ireland. "This is quite a significant move because a lot of investors can only invest in assets which are rated investment-grade by all three of the big three ratings agencies," said Philip O'Sullivan, chief economist with Investec Ireland. "Now that this barrier has been lifted I think the results from this should be a further reduction in our country’s borrowing costs," he told AFP. Dublin raised 3.75 billion-euros ($5.1 billion) in a 10-year bond auction last week, enjoying huge demand for its first bond issue since exiting the bailout programme. Bond prices surged ahead of the expected move by Moody's. The 10-year yield fell from 3.28 percent Wednesday to around 3.17 percent late Friday. "Today's upgrade will have benefits for the economy as a whole by putting downward pressure on the price of credit for companies and organisations in Ireland who are reliant on the financial markets for funding," Noonan added. Ireland's economy was severely battered by a banking crisis and the country's over-reliance on the construction sector which imploded when the global crisis hit. Dublin turned to the IMF and the EU in November 2010 for an 85 billion euro ($115 billion) lifeline, sparking years of spending cuts and tax rises. On December 15, Ireland returned unaided to the international lending markets -- while eurozone strugglers Greece, Portugal and Cyprus remain locked into the bailout process. Ireland's gross domestic product (GDP) expanded by 1.5 percent in the July-September period compared with the previous three months, according to the Central Statistics Office (CSO).  

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