Upgrade by Fitch is 'sign of progress we have made'
GLOBAL ratings agency Fitch has upgraded Ireland's credit rating as the country's cost of borrowing fell to a record low yesterday.
Fitch upgraded Ireland last night to A- from BBB+ with a stable outlook. Now two of the three main credit ratings agencies have Ireland in the A category after the upgrade by Standard & Poor's in June.
The cost of borrowing also fell to a record low as the yield on the 10-year bond dipped to below 2pc for the first time to 1.99pc. That means the rate that the country is being charged to borrow money on the international markets is cheaper than that of the United States, the UK and France.
Finance Minister Michael Noonan said the upgrade reflects the progress that has been made in growing the economy, creating jobs, repairing the banking sector and improving the public finances.
"Ireland is now rated at A grade by two of the three main rating agencies, our international reputation continues to improve and the National Treasury Management Agency (NTMA) continues to do an excellent job in securing stable and low-cost funding for the State," Mr Noonan said.
"This upgrade will further support their funding plans and will have positive impact across the economy."
Fitch said Ireland had remained compliant with eurozone and domestic budgetary rules and forecast the deficit would fall below the 4.8pc of GDP target this year.
It also highlighted the growth in employment and said it expected the economy to grow 2.2pc this year and 2pc between 2015 and 2016.
The 2.2pc rate is broadly in line with expectations from the Department of Finance, but lower than the 3pc projection from the ESRI.
It also said weaknesses in the banking sector had declined.
The upgrade by Fitch, which is another sign of improved investor confidence in the country, means two of the big three ratings agencies have lifted Ireland into the A category.
Standard & Poor's also upgraded Ireland in June to A- and predicted the economy would grow faster than it initially expected over the next two years.
Experts had been expecting yesterday's upgrade as the ratings giant didn't upgrade the country during its last review in February.
NTMA chief executive John Corrigan said the upgrade underpinned the already strong investor sentiment and would widen the potential investor base for government bonds.
It is the latest positive assessment of the economy and comes just months before the Finance Minister is due to deliver a potentially much softer-than-expected Budget 2015 in October thanks largely to better-than-predicted tax returns.
In June, Standard & Poor's said it was raising Ireland's long-term sovereign credit rating to A-, with a positive outlook, meaning there's a one in three chance of another upgrade within two years.