Ireland No Longer Junk Status

Ireland No Longer Junk Status.

One of the World’s leading credit rating agencies Moody’s has removed Ireland’s “junk bond” status and re-upgraded Ireland to ‘investment grade’ bonds. 

A move that see’s Ireland’s credit rating increased from Ba1 to Baa3.

This follows a concerted effort by Ireland over the last 6 years to rebuild its economy and repay €85bn bailout funds it received from the EU back in 2010.

Last month (December 2013), Ireland finally exited the EU bailout programme.  What does that mean?  It means that Ireland has “cancelled its overdraft facility” with the EU.  In very simple terms, it means that Ireland is confident of borrowing money on the open market when it needs to rather than having an overdraft facility with the EU to draw funds when needed.

Comment

Austerity measures in Ireland have been harsh.  Property prices have collapsed since 2007 and Ireland is now starting to see the benefit of rigorous controls on spending and borrowing.

We must all congratulate the Irish.  Their costs of borrowing are lower as confidence from investors has returned and with Moody’s upgrading their credit rating i.e. the Irish Government’s ability to repay its debt, the costs to borrow further will fall.

We suggest many indebted EU nations should take a long, hard lesson from the Irish on how to manage your way out of crisis and indeed, we suggest the Irish should not let up.  Financial prudence makes sense whether you are an individual considering an overdraft or credit card as well as a going to the other extreme of sovereign state debt.