Fitch upgrades Ireland’s credit rating to highest since 2009

Fitch upgraded Ireland’s credit rating to its highest level since 2009, the latest move by one of the major ratings agencies on the Irish sovereign.

Fitch upped Ireland’s rating to AA from AA-, the agency said in a statement late on Friday. That implies a “very low default risk” and a “very strong capacity for payment of financial commitments.”

“Ireland has a prudent domestic fiscal framework designed to mitigate risks from the large and highly-concentrated windfall corporate tax revenue,” Fitch analysts led by Greg Kiss said. The firm also pointed to the Government’s self imposed limit on spending growth of 5 per cent per year. Under last year’s Budget, the Government plans to increase spending by about 6.1 per cent.

Still, Fitch do not see a “sizeable shift in macro-fiscal policy” regardless of who makes up the next government.

The upgrade is a sign of continued international confidence in the Irish economy. It could also potentially impact Ireland’s borrowing costs at future bond sales.

Fitch is the second of the three big ratings agencies to move Ireland back to AA, following Standard & Poors last year. Moody’s has Ireland rated at Aa3.

The upgrade “is another positive development for Ireland,” Dave McEvoy, director of funding and debt management at the National Treasury Management Agency which manages Ireland’s debt, said in a statement. Today’s upgrade is underpinned by several key drivers including Ireland’s improved debt position, pre-funded cash balances, long average maturity and low refinancing needs”.

Minister for Finance Michael McGrath also welcomed the move, calling it “a welcome demonstration of the fundamental resilience of our economy and the success of this Government’s balanced and sustainable approach to budgetary policy.”