Thursday 18 December 2014

Ratings agency positive for Ireland, negative on recovery

Published 22/11/2012 | 05:00

FITCH recently became the first ratings agency since the start of the crisis to give an uptick to a eurozone country – and that country was Ireland – when its outlook was raised from "negative" to "stable".

So there was considerable interest in the contribution from Fitch's John Hatton at yesterday's annual conference of the Irish Association of Corporate Treasurers, but disappointment when Mr Hatton said he would be talking about corporate ratings, not government ones.

"I know nothing about government ratings," he said.

Well, not entirely.

Mr Hatton took the conference through a highly plausible scenario where the eurozone survives, but its troubles produce only a protracted, weak recovery.

Regulated utilities would fare badly, Fitch thinks, as cash-strapped governments tap them for dividends and hold down their prices.

Something of the kind has already happened in Spain. The mighty ESB, though, which this month borrowed €500m on the markets, would not be one of them.

The crisis may even have brought some benefits to the corporate sector.

Ultra-low rates in "safe havens" like the USA and Germany have helped company borrowing costs as well – "but for how much longer?" Mr Hatton asked.

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