Yes vote won't do anything for credit rating -- Fitch
THE Yes vote in last week's referendum on the eurozone's fiscal compact is positive for the country but Ireland's credit rating won't be boosted, ratings agency Fitch said yesterday.
"It removes a potential source of considerable uncertainty about Ireland's future funding. A No vote would have increased downward pressure on Ireland's 'BBB+' rating because it would have stopped the country receiving European Stability Mechanism funds after the current EU/IMF programme finishes next year.
"The Yes vote has removed this immediate concern," the ratings agency said in a note.
However, while Fitch welcomed the Yes vote, it refused to change the country's credit rating outlook, saying the positive result "does not" change our financial situation.
"It does not change Ireland's fiscal situation, with the country set to run a large deficit for some time.
"Export-orientated Ireland is exposed to an economic downturn in its major European trading partners, though its improving competitiveness mitigates the impact of such adverse external shocks," it said. The ratings agency went on to say that with yields on Irish government bonds maturing after 2013 in excess of 7pc, the timing and cost of Ireland's return to the debt markets remain unclear.
"These concerns are reflected in our negative outlook on the rating," it said.
However, it said Ireland had stayed on track to meet and even exceed the underlying fiscal targets of the EU-IMF programme.
"This was even though the headline deficit ended up at 13.1pc of GDP last year, significantly higher than previous estimates, due to bank-related payments.
"And the strong political support for, and broader public acceptance of, a long-term fiscal consolidation plan has supported the adjustment process so far. Thursday's Yes vote, which was backed by most mainstream/moderate political parties, is another expression of this," the influential US-based agency said.
It described the result as "marginally positive", for the eurozone as a whole.
"It does not add to the voter discontent with fiscal consolidation and reform that characterised, for example, the Greek elections on May 6. However, nor is it likely to significantly alter this dynamic in the rest of Europe," the agency said.