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S&P upgrades Ireland outlook on debt reduction hopes

S&P upgrades Ireland outlook on debt reduction hopes
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Standard & Poor’s has upgraded its outlook on Ireland’s credit rating.

Based on the opinion that Dublin’s debt may fall faster than expected, its BBB-plus rating is now considered to be positive, up from stable.

The move comes ahead of a planned exit by Ireland from its EU/International Monetary Fund bailout at the end of this year.

It backs Ireland’s status as Europe’s strongest bailed out economy amid political turmoil in Portugal and Greece.

The country did recently tip back into recession for the first time in four years, but S&P says that while external demand remains weak,
Ireland’s domestic economy is showing signs of stabilising.

S&P said it saw a more than one-in-three probability it would raise Ireland’s credit rating during the next two years, and praised the “strong consensus” among the country’s largest political parties for fiscal consolidation and reform.

“When you look at some of the cliff-hangers we have had in the rest of the periphery, Ireland has kept its head down and got on with it and I think that has been recognised,” said Philip O’Sullivan, chief economist at NCB Stockbrokers.

Standard & Poor’s had the country on negative outlook until February, when Dublin struck a long-awaited deal with the European Central Bank allowing it to convert promissory notes into long-term bonds. That effectively gave Dublin far longer to repay debts it ran up as it rescued the Irish banking system.