Ratings agency Standard & Poor's has upgraded its outlook on Ireland’s credit rating to positive from stable, saying that the economy is recovering and the government’s budget deficit may narrow faster than expected.
Ireland’s BBB+ grade remained unchanged, and S&P said there was a one-in-three chance the rating will go up in the next two years. Moody’s is now the only major ratings agency rating Irish sovereign debt as non-investment grade.
Today’s report said there was a “strong consensus” among the largest political parties to maintain debt-cutting policies and boost competitiveness. Government debt will peak at 122 per cent this year, it said, and fall thereafter to 112 per cent by 2016.
But S&P also warned that the private sector’s access to external funding is “fragile,” and that its banking sector has a high and rising level of non-performing loans.
The move comes six months ahead of the country’s planned exit from the EU/IMF bailout. On the news, ten-year Irish bond yields fell four basis points to 3.9 per cent.