Ireland on Friday regained its double-A sovereign debt rating for the first time since its financial crisis a decade ago, as S&P Global took the lead among credit agencies in raising its rating a notch for the European Union's fastest-growing economy.
Ireland lost the confidence of bond markets when a banking and fiscal crisis forced it into a three-year international bailout in 2010. Fellow ratings agency Moody's downgraded the country's debt to non-investment grade.
The economy has recovered rapidly and S&P cited what it called prudent policies and strong growth when nudging the country's credit ratings to 'AA-/A-1+' from 'A+/A-1', with a stable outlook.
"This upgrade reflects the next stage in the journey we, in Ireland, have been on for the last decade or so. Last year we ran a budgetary surplus for the first time since 2007 and a further improvement is in the pipeline for this year," Irish Finance Minister Paschal Donohoe said in a statement.
Noting that the upgrade puts Ireland closer to so-called "core" euro zone debt issuers including France, Belgium and Austria, Ireland's debt office said the move would increase the pool of potential buyers of Irish government bonds.
S&P said it expected the Irish economy to remain competitive despite external risks, including the possibility of a no-deal Brexit, which remains the biggest, though diminishing, risk to the economy.
Britain has agreed to a divorce deal with the European Union, which British Prime Minister Boris Johnson hopes to win parliamentary approval for if he retains power after an election on Dec. 12. Ireland said earlier this month that a smooth Brexit would provide a short-term boost for the economy.
The ratings agency also said Ireland would remain vulnerable to any fresh rounds of protectionist trade policy, including from the United States. However, the government has accumulated substantial fiscal buffers to offset those external risks, it noted.
Growth and employment in the Irish economy are the strongest among the developed world, the agency said, adding that despite recent moderation in growth, the country's flexible labor and product markets and its buoyant net immigration have helped keep its growth higher than the Eurozone average.
Fitch Ratings affirmed its 'A+' rating on Ireland earlier in November. Moody's and DBRS rate Ireland as A2 and A (high) respectively. (Reuters)
Source: www.businessworld.ie
