Ratings agency Moody's has restored Ireland’s sovereign credit rating to investment grade and changed its rating outlook to positive from stable.
The agency bumped Ireland's rating from the non-investment or 'junk' level of Ba1 - which it had been since 2011 - to Baa3 (investment grade) with a positive outlook.
In a statement, Moody's said the two main drivers for the upgrade were the growth potential of the Irish economy and the recent exit from the EU/IMF support programme.
"A key positive signal is the faster pace of employment creation, with the unemployment rate having dropped 2.7 percentage points from its Q2 2012 peak," the agency said.
It added that the Government's ability to exit the Troika's bailout programme without a precautionary credit line reflected that its reform agenda "stayed largely on track throughout the programme, despite weaker than expected domestic and external economic conditions".
The upgrade follows a successful auction of Irish 10-year bonds earlier this week - to which Moody's assigned its Baa3 rating - and means that Ireland now enjoys investment-grade status with all three of the main ratings agencies for the first time since July 2011.
Many of the big pension and investment funds were prevented from investing in Irish government debt because it had a junk status. The move is expected to lead to a further reduction in the country’s interest rate.
Tánaiste Eamon Gilmore said that the upgrade was "another signal of confidence in Irish recovery", while Finance Minister Michael Noonan said it "highlights the major improvement in investor sentiment towards Ireland."
Moody's upgrade another signal of confidence in Irish recovery.— Eamon Gilmore (@EamonGilmore) January 17, 2014
"The decision by Moody’s to upgrade Ireland’s credit rating reflects the significant progress that has been made in stabilising the public finances, restructuring the banking sector and, most importantly, growing the economy and creating jobs," Minister Noonan said.
"Ireland is now rated at investment grade by all of the major credit rating agencies, highlighting the major improvement in investor sentiment towards Ireland.
"The change in the outlook accompanying Ireland’s rating from stable to positive reflects Moody’s expectation of a sustained recovery in the Irish economy and improved debt dynamics."
The National Treasury Management Agency (NTMA) also welcomed Moody’s decision.
“I am pleased to note that one of the main drivers for today’s upgrade was Ireland’s restored market access,’’ said NTMA Chief Executive John Corrigan.
“The change to the ratings outlook represents a positive context for future rating reviews.”
Moody's also upgraded the debt ratings of the National Asset Management Agency (NAMA) to Baa3/P-3 from Ba1/NP. The outlook on NAMA's rating is also positive.
In addition, Ireland's foreign and local-currency country ceilings for long-term debt and deposits have been raised to A2 from A3. The country ceilings for short-term foreign-currency debt and deposits were also raised to P-1 from P-2.