Moody's Investors Service has today upgraded Ireland's government debt ratings to Baa3/P-3 from Ba1/NP. The outlook on the ratings is now positive. The two main drivers for the upgrade are: (1) The growth potential of the Irish economy, which together with ongoing fiscal consolidation is expected to bring government debt ratios down from their recent peak; (2) The Irish government's exit from its EU/IMF support programme on schedule, with improved solvency and restored market access. In a related rating action, Moody's also upgraded the debt ratings of Ireland's National Asset Management Agency (NAMA), whose debt is fully and unconditionally guaranteed by the Irish government, to Baa3/P-3 from Ba1/NP. The outlook on NAMA's rating is also positive. In addition, Moody's has assigned its Baa3 rating to the recent 2024 benchmark bond issue that the government sold earlier in January. In addition, Ireland's foreign and local-currency country ceilings for long-term debt and deposits have been raised to A2 from A3. The country ceilings for short-term foreign-currency debt and deposits were also raised to P-1 from P-2. These ceilings reflect a range of undiversifiable risks to which issuers in any jurisdiction are exposed, including economic, legal and political risks. Ireland's ceilings also incorporate the risk of euro exit and redenomination, consistent with our treatment of other sovereigns in a currency union. These ceilings act as a cap on ratings that can be assigned to the foreign and local-currency obligations of entities domiciled in the country.
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