Standard & Poor's decision will likely serve as a stimulus after data last month showed the Ireland’s economy had unexpectedly tumbled back into recession.
The credit-ratings agency has upgraded its outlook positive from
stable, saying the Irish government is expected to trim its debt
ahead of schedule, Reuters reported.
Ireland lost its coveted AAA credit rating in 2009 in the
aftermath of the global financial crisis when it was forced to
obtain IMF bailout loans worth 80 billion euros; it now has a
BBB-plus rating.
Ireland is scheduled to exit from its EU/IMF bailout in six
months and return to regular borrowing on the bond markets. The
upgraded rating should help market sentiment as Ireland had
unexpectedly fallen into recession for the first time in four
years.
Moody's as the only major rating agency that rates Irish
sovereign debt as non-investment grade, or, in less-diplomatic
terms, “junk.”
"The outlook revision reflects our view that Ireland's general
government debt burden is likely to decline more rapidly, as a
percentage of GDP, than we had previously expected," S&P
said in a statement.
"This is due to sustained budgetary consolidation, stabilizing
domestic demand, and higher receipts from government asset
sales."
The ratings agency said it saw a more than one-in-three
probability it would raise Ireland's credit rating during the
next two years.
S&P said it expects Ireland's national debt to peak at 122
percent of GDP in 2013 but decline to 112 percent by 2016.
S&P's had ranked Ireland in negative territory until
February, when Dublin completed a deal with the European Central
Bank allowing it to convert promissory notes into long-term
bonds. This will give Dublin a longer grace period to repay debts
it accrued in rescuing the Irish banking system from default.