FITCH HAS become the second ratings agency within a week to signal an improved outlook for Ireland’s credit rating.
In an interview with the Wall Street Journal yesterday, Fitch analyst Gergely Kiss said the agency could be approaching a point where it would remove its “negative” outlook on Ireland’s BBB+ rating.
He said, however, that it could still be some time before the rating itself would be improved. Such a move would rest on any deal the Government could secure with its euro partners on easing its debt burden.
Similar indications on the Irish debt outlook were made last week by an analyst with rival rating agency Moody’s Investors Services.
“There are a constellation of factors weighing on – first from the wider euro zone crisis and now the weakening US and UK economies,” said Fitch’s Mr Kiss.
He added that the Irish outlook looked weaker than it did even a few months ago.
Mr Kiss said he believed a banking deal would be agreed but flagged uncertainty over when this would happen and how substantial it would be. He later told Bloomberg that he expected that the promissory notes used to bail out Anglo Irish Bank would be included in any new arrangement.
The Fitch comments came as EU leaders gathered for a Brussels summit and after the National Treasury Management Agency successfully sold €500 million worth of Treasury Bills yesterday.
In a statement, the NTMA said the auction received bids which totalled €1.8 billion, more than three times the amount on offer.
The bills were sold at an annualised yield of 0.7 per cent and have a maturity of three months. The rate was the same as when similar securities were sold last month.
Yields on Irish benchmark 2020 bonds fell to a 12-month low of 4.705 per cent yesterday, down from more than 14 per cent in July of last year.
Ireland returned to the long-term bond markets in July for the first time in almost two years, selling €4.2 billion of new debt.
Meanwhile, Spain’s government bonds rose for a third day after it sold more than its maximum target at a debt auction.
The country’s 10-year yields dropped to the lowest level since April as German chancellor Angela Merkel told parliamentarians in Berlin that stability was taking hold after three years of crisis in the euro area.
Italy, meanwhile, got orders for more than €18 billion of bonds from retail investors, double the two previous offers combined.
France also auctioned notes and inflation-linked bonds yesterday.
– (Additional reporting, Bloomberg)
