Moody's upgrades Ireland's long-term sovereign debt rating

Moody's upgraded its rating on Ireland's sovereign bonds, hailing the country's strong growth, prospects for a continued reduction in Dublin's debt pile and the recent political compromise reached between its two largest political parties.

The ratings agency bumped up its long-term credit rating from Baa1 to A3, with a 'positive' outlook, with the latter entailing that the next most likely move would be a further upgrade.

“Ireland’s key credit fundamentals have continued to improve at a faster pace than expected even a few months ago, including a stronger economic recovery and a more marked reduction in the public debt ratio,” Moody's said in a statement.

“The recent political agreement between the two largest parties in parliament and the recent election of a minority government led by Fine Gael, which has established a strong track record of fiscal management over the past several years, give comfort that the budget deficit will be reduced further in coming years.”

The European Commission, the EU's executive arm had forecast Ireland's economy would grow by approximately 5% in 2016 followed by a rate of expansion of 3.5% in 2017.

In parallel, that would allow Dublin to slash the stock of public debt as a percentage of gross domestic product from the peak level of 120% reached in 2013 to 89% in 2016.

Analysts at Moody's also downplayed the potential negative impact which Brexit might have on the country's finances.

“While a U.K. exit from the EU would have negative repercussions on Ireland, given the close economic ties, Moody’s considers that this risk would be manageable for the Irish economy,” they said.