Fitch upgrades Ireland’s credit rating on recovery

Ratings agency Fitch has upgraded Ireland’s long-term foreign and local currency issuer default credit ratings to an A- and has said the country’s financial outlook is stable.

The agency said it regards the country’s solvency as stable and has also upgraded Ireland’s senior unsecured foreign and local currency bonds to A- from BBB+.

Fitch said the government had continued its multi-year fiscal consolidation programme following the exit from the Troika programme at the end of 2013 and remains compliant with domestic and eurozone fiscal rules.

It forecasts the general government deficit to be below the 4.8% of GDP target and expects a small primary surplus compared with a primary deficit peak of more than 9% of GDP in 2009.

The agency said market finance conditions have steadily improved over the past two years since Ireland returned to the markets.

The employment-led recovery of the economy gained momentum in the first quarter of this year and Fitch forecasts GDP growth of 2.2% this year and 2% in 2015-16.

Unemployment continued to decline in the first half of the year and reached 11.5% in July 2014, which is in line with the 11.5% eurozone average, down from a peak of 15% in early 2012.

Fitch said improving labour market conditions have had positive spillover effects for heavily indebted households, the housing market and our public finances.

Ireland also benefited from the strengthening recovery of its major trading partners, especially the UK, reflected in exports growth accelerating to 7.4% in the first quarter of the year.

NTMA chief executive John Corrigan said Ireland now enjoys A ratings with two of the three major agencies (Fitch and Standard & Poors).

He said the upgrade “underpins the already strong investor sentiment towards Ireland and will widen the potential investor base for Government bonds.”