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S&P upbeat about Ireland's return to bond markets

The ratings agency says its maintaining its debt ratings for Ireland and describes the country’s economic outlook as ‘stable’.

Stable: S&P says it is maintaining its ratings for Ireland amid a 'stable' outlook.
Stable: S&P says it is maintaining its ratings for Ireland amid a 'stable' outlook.
Image: dgj103 via Creative Commons

CREDIT RATINGS agency Standard and Poor’s says it is maintaining its ratings for Ireland’s long- and short-term debt, describing the country’s outlook as ‘stable’ in a statement optimistic about the country’s return to the debt markets.

Rival agency Moody’s downgraded Ireland’s long-term debt to junk status in the middle of July. In its statement, Moody’s said that the rating was cut because of the likelihood Ireland would need more financing before returning to the markets at the end of 2013.

However, S&P’s statement today (registration required) shows it has a more positive view on Ireland’s position and its ability to cope with its debt burden and banking crisis:

The ratings on the Republic of Ireland reflect our view of the government’s commitment and capacity to stabilise public finances following a severe banking crisis and a structural deterioration in the fiscal balance. We believe that Ireland’s creditworthiness is sustained by a strong political consensus in favor of fiscal consolidation, which should reduce the general government deficit to around 3 per cent of GDP by 2015.

We also view Ireland’s competitiveness gains since late 2008 and open economy as being supportive of modest, export-led economic growth over the medium term.

S&P says it expects Ireland to have sufficient loan support to see it through 2013, at which point it will return to the markets. By then, the cost of borrowing for the state should have dropped to levels which won’t “put the government’s debt dynamics at risk”.

The agency warned that if the government doesn’t meet its fiscal targets then its ratings for Ireland could come under pressure.

Read: Moody’s downgrades Ireland to ‘junk’ >

Column: Nick Leeson on why Portugal and Ireland have much in common – both need a leg up >

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