Cost of Irish borrowing falls as S&P raises outlook on Irish debt
THE cost of Irish borrowing dropped today on the back of an upgrade by ratings agency Standard & Poors.
Standard & Poor’s has a more optimistic view of the Irish economy as it changes its outlook from stable to positive.
The 10-year yield dropped 15 basis points to 3.82pc - the biggest fall in four weeks.
Today's report from S&P said the country’s BBB+ grade has not risen. Nonetheless, this development bodes well for the possibility of an upgrade for Ireland if the economy continues to perform well.
While the agency’s review included warnings around external funding and non-performing loans, Ireland’s debt burden is expected to decline more quickly than previously forecast.
"Ireland's economic recovery is under way," said S&P.
The announcement follows criticism of the ratings agency yesterday from Italian Economy Minister Fabrizio Saccomanni for downgrading Italy's credit rating, saying it failed to take account of recent government measures to boost growth.
The Mediterranean country’s rating was reduced from BBB+ to BBB due to weakening economic prospects and the country's impaired financial system, according to S&P.
Greece is also struggling to recover from the economic backlash as its public sector took to the streets in protest this week against further austerity measures put in place.
EU lenders demanded harsher reform implementation from the Greek government as a condition for the release of an additional tranche of bailout funds.
The upgrade to positive from stable on Ireland's BBB-plus rating comes ahead of a planned year-end exit from its EU/IMF bailout, and backs its status as Europe's strongest bailed out economy amid political turmoil in Portugal and Greece.
Earlier this week, Taoiseach Enda Kenny agreeed with a report from the Economic and Social Research Institute (ESRI) that the Government must stick to its plans for €3.1bn in cuts and taxes in the October budget.