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.
The ratings agency also placed Ireland 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 said that momentum suggests "an increased likelihood of securing the sustained long-term growth needed to achieve a turnaround in Ireland's public finances".
The agency also noted that Ireland exited its European Union-International Monetary Fund support programme in December "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, which he said was evidence of a "major improvement" in investor sentiment.
"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."
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 on December 15.
Irish bond prices surged ahead of the expected move by Moody's. The 10-year bond 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 financial storm hit in 2008.
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.
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).
