Skip to main content

UPDATE 2-Ireland gets fresh boost as Moody's removes junk rating

Moody's Investors Service upgraded Ireland to investment grade on Friday, handing the government a major post-bailout boost and opening its already sought-after debt to investors prohibited from buying junk-rated paper.

It is the latest in a run of good news for Ireland, which became the first euro zone country to complete a bailout, made a storming bond market return last week and has an economy that is picking up steam.

Moody's, which was the only rating agency to class Irish government debt as "junk", raised it to Baa3 from Ba1 with a positive outlook, citing the economy's growth potential and restored market access as the main drivers.

"They undertook the fiscal consolidation and structural reforms in the (bailout) program with great seriousness. It really was their determination to succeed that helped them to both regain and retain investor confidence," Kristin Lindow, Moody's analyst for Ireland, told Reuters.

"It shows that meeting and exceeding criteria is very helpful for regaining market confidence."

Moody's, which nudged up its outlook on Ireland to stable last September, downgraded the country's banks last month and said on Friday that a cleanup of non-performing loans that is still in the early stages would likely impair profitability.

However, Lindow said Moody's does not expect the government will have to provide much if any additional capital to the banking system following an upcoming European stress test.

The upgrade comes as the economy shows signs of bettering two years of scant growth, with house prices on the rise, the jobless rate falling to 12.5 percent from a 2012 peak of 15.1 percent and GDP growth of 2 percent expected this year.

Despite having a debt and budget deficit among the highest in Europe, Ireland has kept investors on its side by consistently hitting fiscal targets and has largely brushed aside Moody's negative stance since resuming borrowing two years ago.

NEW INVESTORS

At the height of the euro zone crisis in July 2011, Moody's cut Ireland's rating to Ba1, one notch below former financial market pariah Colombia, and that prohibited large, mainly Asian-based ratings-sensitive funds from touching Irish debt.

Restoring it to investment grade allows some sovereign wealth funds and Asian central banks to rejoin the scramble for Irish paper where yields on 10-year debt have fallen below 3.5 percent from a mid-2011 high of 15 percent.

_0">

With such funds able to place orders in blocks of some 300 million to 500 million euros at a time, their return would have a big impact at auctions set to resume at a modest pace this year when 500 million to 1 billion euros are likely to be offered.

"This is a better-than-expected result for Ireland, to get the outlook changed to positive is an added bonus," said Ryan McGrath, a bond dealer at Cantor Fitzgerald.

"What it means on Monday morning is that yields are going to trade lower. Yields have come incredibly far, but I think there is room to tighten further versus the core. What it does in the year going forward is it opens up a new investor base."

Market participants see ratings momentum moving Irish debt further away from fellow peripheral countries such as Spain and Italy, and towards France and Belgium, sometimes described as members of the euro zone's "soft core".

_4">

The head of Ireland's debt agency, John Corrigan, said in a statement that the shift in outlook gave a positive context for future rating reviews.

_5">

Fitch, which rates Irish debt three notches above junk status at BBB+ with a stable outlook, is next in line to give an update in a month's time. S&P lifted the outlook on its BBB+ rating to positive last year and will review it again in June.

_6">

New EU rules require credit agencies that operate in Europe to lay out the dates on which they review a country's rating.

_7">

S&P decided against downgrading Portugal's credit rating earlier on Friday and removed it from Creditwatch negative, while Fitch affirmed Netherlands at AAA, keeping its outlook at negative.

_8">

"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 who are reliant on the markets for funding," finance minister Michael Noonan said in a statement.

_9">

Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o