Markets to deliver judgment after Moody’s raises Ireland’s debt rating

Markets will today give their reaction to the decision by Moody’s to raise the rating on Ireland’s sovereign debt to investment grade.

The decision, after hours last Friday, brings Moody’s into line with Standard & Poor’s and Fitch, and makes investment in Ireland possible for countries prescribed to invest only in states with investment grade debt ratings from all the major agencies.

Yields on Ireland’s debt have been falling steadily since July 2011, with minor interruptions and the National Treasury Management Agency raised €3.75 billion in its first fundraising since Ireland’s exit from the troika bailout. At market close on Friday, ahead of the Moody’s announcement, the yield on the benchmark Irish 10-year bond was 3.17 per cent.

IDA Ireland chief executive Barry O’Leary said over the weekend that the upgrade sent out a very positive message about Ireland around the world. “Investment agency ratings are used by foreign investors when they are deciding on where to locate their businesses,” he noted. “IDA will be highlighting Ireland’s upgrade with current and prospective clients over the coming weeks.”

Fianna Fáil finance spokesman Michael McGrath said the decision was “overdue” and “largely reflects Moody’s catching up with the other ratings agencies and the market generally which had already taken a more favourable view of the prospects for Irish bonds”. He said the key challenge now was to maintain market access.

Goodbody stockbrokers economist Dermot O’Leary said Moody’s move was “another positive surprise will keep the Irish bond rally on track”.

“While it is a surprise given the recent downgrade of Irish banks, it is long overdue,” he said.– Additional reporting: Bloomberg