Ireland's borrowing costs fall ahead of potential upgrade
IRELAND’S cost of borrowing fell to a new low today ahead of a potential upgrade from ratings giant Fitch.
The yield on Ireland’s 10-year bond dropped below 2pc to 1.99pc.
It comes ahead of an update from Fitch due later tonight.
Fiona Hayes of Cantor Fitzgerald Ireland said they expect an upgrade to A-, which, if it happens, would mean two of the big three ratings agencies will have Ireland in the A category.
“The last statement [from Fitch in February] outlined three main criteria which could result in a future upgrade – (i) greater confidence that the debt-to-GDP ratio will be on a firm downward trend over the medium term; (ii) sustained, balanced economic recovery; and (iii) a reduction in financial sector vulnerabilities, notably an improvement in banks' asset quality and profitability,” Ms Hayes said.
“We believe that Ireland has made substantial progress on all three fronts and fully expect an upgrade to A- today.”
In June, Standard & Poor’s upgraded Ireland’s credit rating to A- and predicted the economy will grow faster than expected over the next two years.
It came just weeks after Moody’s lifted the country’s rating by two notches in a better than expected assessment.
S&P said it had revised its 2014-2016 average GDP growth rate to 2.7pc from 2pc.
It said this reflected its expectation of a continued strong external performance and a sustained recovery in the domestic economy.