Creighton 'confident' of Irish credit rating upgrade
Minister for European Affairs Lucinda Creighton has said she is “quite confident” that Ireland will see an upgrade to its credit rating as it seeks to return to private bond markets by the end of the year, though she stressed it was not the only factor in Ireland making a return to the markets.
Ms Creighton was speaking to The Irish Times after she addressed the European Parliament on the legislation of credit-rating agencies, ahead of a parliament vote on the issue today. It was the Minister’s first time representing the European Council at the plenary session of the parliament, a key function of the Irish presidency. “The fact that the Irish bond sale last week was oversubscribed, even as Ireland still had junk status with Moody’s, shows that it is not the only factor,” she said.
Moody’s assigned Ireland’s debt to junk status in July 2011. While Standard and Poor’s (S&P) has a negative outlook on Ireland, Fitch raised its stance to stable from negative in November, citing a narrowing fiscal deficit and a view that Irish banks probably would not need new state capital.
Promissory notes deal
Ms Creighton reiterated her view that Ireland would reach an agreement with the European Central Bank on the Anglo Irish Bank promissory notes ahead of the March 31st deadline. The European Parliament will vote today on new legislation for credit-rating agencies, following six months of negotiations with the European Council. Under the proposed legislation, rating agencies will be permitted to issue unsolicited reports on sovereign debt only three times a year, and will be required to publish those reports after the close of business and at least one hour before the opening of trading in the EU. All ratings will be published on a European platform.
The legislation also seeks to increase competition in the sector, which is dominated by three main players: Moody’s, S&P and Fitch.
According to the EU the new rules mean that a rating agency could be held liable in cases where an investor was damaged.
Noting that ratings have been published “too swiftly” on sovereign debt in the past, EU commissioner on internal markets and services Michel Barnier told the parliament that Europe “wants to draw a line under the risk of destabilisation in the market”. The new regulations will apply to all credit rating agencies – currently 23 – operating in the EU.