Credit rating agency S&P raised its credit ratings for Irish banks last Friday afternoon. AIB’s credit rating was raised to investment grade, increasing from BB+ to BBB-. Bank of Ireland’s was raised from BBB- to BBB. PTSB’s credit rating was raised to BB, previously BB-. The outlook for the three banks was noted as stable.
S&P note that the ratings actions reflect the decreasing economic risks for Irish banks, with “the sustained recovery in property prices…helping to reduce the negative impact of previous imbalances”.
Furthermore, S&P state that that the Irish economy is now in an expansionary phase, from the previous correction phase. Elsewhere, Fitch affirmed Ireland’s credit rating at A, with a stable outlook.
According to Goodbody Stockbrokers, "The S&P ratings upgrades are another positive development for Irish bank’s credit pricing. AIB’s upgrade to investment grade is of particularly note, with any
potential 2017 IPO another possible credit positive event for the bank’s debt pricing."
They added, "We continue to like Irish bank’s ATI and Tier 2 debt, given continued improving asset quality trends, the supportive macroeconomic backdrop, the gap versus their SREP levels and the likely modest MREL issuance requirements."
Source: www.businessworld.ie
