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Moody's backs 'credit positive' sale of state assets

In its weekly credit outlook, Moody’s welcomes the plans to sell state assets – but that our position remains “challenging”.

Image: Mark Lennihan/AP

THE RATINGS AGENCY Moody’s has welcomed the proposed sale of Irish State assets – deeming the programme to raise €3 billion in revenue as “credit positive”.

In its weekly credit outlook issued this morning, the agency said the concession of the EU and IMF to allow a third of the proceeds to be used for job creation was a sign of how Ireland was meeting all the targets set by the Troika.

“Ireland’s ability to proceed with the privatisation initiative also reflects its ability to adhere to the conditions of its EU-IMF financial assistance programme,” the agency said, “at a time when several European countries have delayed or shelved their privatisation plans owing to a lack of demand or political and social resistance.”

The welcome comes despite the fact that the agency gives both Bord Gais and the ESB credit ratings of ‘Baa3 negative’ – the lowest possible grade above ‘junk’ status – while neither Coillte nor Aer Lingus have any ratings at all.

Both the Baa3 ratings are higher than the rating enjoyed by Ireland, which has stood at Ba2 since last July – meaning Ireland itself is in ‘junk’ status.

Moody’s does acknowledge, however, that Ireland’s finances remain in a “challenging position”, with economic growth apparently expected to be 0.5 per cent in 2012 versus 1 per cent in 2011.

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“Moreover, the sale of the state assets has implementation risks, among them the economic environment, regulatory restrictions and political resistance,” the agency said.

Read: Parts of Bord Gais and ESB to be sold off to raise €3bn

Response: FF’s Martin attacks “bare-faced lies” over sale of state assets

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Gavan Reilly

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