Irish credit rating upgraded by Fitch to 'A+'

This is the second major upgrade for Ireland in the past three months

Irish credit rating upgraded by Fitch to 'A+'

Shoppers on Grafton Street in Dublin in 2004 | Image: RollingNews.ie

The Irish economy has received a boost coming into the new year.

The ratings agency Fitch has upgraded Ireland's sovereign credit rating to 'A+' from 'A', with a stable outlook.

The agency also updated the short-term rating to F1+.

Among the factors cited are the significant reduction in Ireland's annual debt service costs, and strong progress in restoring the banking system to sustainability.

This is the second major ratings agency upgrade for Ireland in the past three months, following an upgrade by Moody's in September.

In its latest analysis, Fitch said: "Fitch believes the health of the banking sector is improving, reducing risks to the Irish sovereign and economy."

"Ireland's household debt-to-income ratio is declining and reached 141.6% in 2Q17, but remains the fourth-highest in the EU.

"Rising house prices have cut the proportion of residential mortgages in negative equity to 11.8% in 1Q17 from a peak of 39% at end-2012.

"Moreover, the National Asset management Agency (NAMA), the 'bad bank' set up to address the problems in the banking and real estate sectors arising from the financial crisis, recently repaid its remaining senior guaranteed debt ahead of schedule, removing the associated contingent liability for the sovereign".

It is also forecasting the general Government debt-to-GDP ratio to fall to 65.8% by 2019, from 72.8% at the end of 2016.

The National Treasury Management Agency (NTMA) has welcomed the move.

Its director of funding and debt management, Frank O'Connor, said: "It reflects the significant and sustained improvements in Ireland’s fiscal position and the extent of the reduction in Ireland’s borrowing costs.

"This upgrade cements Ireland’s position as a semi-core Eurozone issuer and is a favourable development that will be positive for our borrowing programme."

Ireland's long-term rating is now firmly in the 'A' category with all of the major credit rating agencies.

Source: NTMA