Terence Flanagan (Dublin North East, Independent)
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55. To ask the Minister for Finance his views on the upgrade of Ireland's bond rating by Moody's; and if he will make a statement on the matter. [3408/14]

Michael Noonan (Limerick City, Fine Gael)
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Moody's upgrade of Ireland by one notch to investment grade on 17 January is very good news.

Ireland is now at investment grade with all five credit rating agencies and this will attract investors who had been hitherto unable to buy Irish government debt because their mandates did not allow them to invest where the credit rating agencies rated the investment below investment grade. Some Asian and Middle-Eastern investors, along with others in Europe including German insurance companies, are now likely to be in a position to buy Irish Government debt. An increase in the market participants and demand for Irish bonds should lead to a reduction in yields.

Market reaction to the Moody s announcement has initially been positive with the yield on the new benchmark 2024 bond quoted at 3.24% (as of Wednesday 22 January, 9am), some 21 basis points lower than the Friday 17 January  trading session close. The reduction in sovereign yields should also have a positive impact on the rates at which the commercial semi-state bodies (ESB, Bord Gáis, etc.) can borrow.

This was the first rating change by Moody s since it cut Ireland s rating to sub-investment grade in July 2011. Moody s cited two reasons for the upgrade: (i) 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; and (ii) the Irish government s exit from its EU/IMF support programme on schedule, with improved solvency and restored market access.

In addition to the increase in the rating, Moody's also upgraded the outlook for Ireland to positive. This is significant as it signals that Moody's are prepared to look at another upgrade for Ireland, possibly over the space of the next eighteen months. 

All in all, this is good news for Ireland and will help to ensure that the momentum of economic and fiscal recovery is maintained. I would in particular like to compliment, in this House, the hard work done by the National Treasury Management Agency, during the dark days when we were effectively locked out of the markets, in spreading the message that Ireland was dealing with its problems and in paving the way for our return to normal market financing.