Moody's lifts Ireland's sovereign rating to 'Aa2' on fiscal resilience

Moody's said underlying growth remained strong, with public investment under Ireland's National Development Plan expected to help ease constraints in areas such as housing and essential infrastructure.

Credit ratings agency Moody's on Friday upgraded Ireland's sovereign credit rating to "Aa2" from "Aa3" and reiterated its positive outlook, saying it expects improvements in the country's economic and fiscal strength to continue.

The ratings agency said its assessment was supported by Ireland's strong institutional framework, effective policymaking and resilience to recent changes in US trade and tax policies.

Foreign direct investment in the country was delivering stronger and more lasting economic and fiscal benefits than previously assessed, it added.

Moody's said underlying growth remained strong, with public investment under Ireland's National Development Plan expected to help ease constraints in areas such as housing and essential infrastructure.

Ireland had reduced its debt burden more rapidly in recent years than Moody's had expected, the ratings agency said, adding that it expects the trend to continue, supported by resilient government revenues and prudent fiscal management.

However, the country remains vulnerable to external shocks, especially changes in US trade, tax and industrial policies, the ratings agency warned, but added that the government's high policy effectiveness should help cushion their impact.

Dave McEvoy, Director of Funding and Debt Management at the NTMA, said the upgrade is underpinned by improvements in Ireland’s debt metrics and positive international investor sentiment, as evidenced by the continued strong demand for Ireland’s debt.

"With €9.5bn of benchmark bonds issued so far this year, from a total funding range of €10bn to €14bn, we are well positioned heading into the final months of the year," he said.

Tánaiste and Minister for Finance, Simon Harris said Ireland's management of the public finances is critically important given the recent volatility in the bond market.

"We will continue to build fiscal buffers by running surpluses, investing in our sovereign wealth fund, the Future Ireland Fund, and saving money in the Infrastructure, Climate and Nature Fund. This will ensure that we have the flexibility to respond to today’s challenges, while preparing for those to come," he said.