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Fitch Boosts Irish Bailout Exit Prospects Improving Outlook

By Joe Brennan - Nov 15, 2012


Fitch Ratings raised its outlook on Ireland’s debt to stable from negative, boosting the government’s efforts to become the first euro-region nation to exit a bailout since the debt crisis took hold.

Fitch late yesterday affirmed its BBB+ stance on the nation, citing a narrowing of the fiscal deficit and a view that its banks probably won’t need further state capital. London- based Fitch, which removed Ireland from watch negative in January, stripped the nation of its AAA rating in April 2009.

“It is encouraging to see further positive noises from the ratings agencies around Ireland,” Philip O’Sullivan, an economist at Dublin-based NCB Stockbrokers, said by e-mail. “Following the public recognition by Moody’s that the risks around Ireland have abated, the improved outlook on Ireland from Fitch is an incremental positive.”

Moody’s Investors Service yesterday removed a warning that Ireland may follow Greece in inflicting losses on investors, after the government made a partial return to credit markets and lowered its deficit. Ireland stepped out of international bond markets and sought a 67.5 billion euros ($86 billion) bailout in 2010 as its banking system came close to collapse.

The yield on Ireland’s benchmark security due in October 2020 was unchanged today at 4.73 percent, down from 14 percent in July 2011.

Bill Sale

Ireland plans to hold its fourth public auction of three- month treasury bills today. Glas Securities, a Dublin-based fixed-income firm, said today in a note a sale of longer-term debt by Ireland may be “imminent.”

The debt agency described Fitch’s move as an encouraging recognition of the state’s efforts to deal with the crisis sparked by the implosion of a real-estate bubble in 2008. The state has pumped about 64 billion euros into its financial system and now controls five of the six biggest domestic lenders.

MORE - http://www.bloomberg.com/news/print/2012-11-14/moody-s-hornung-lifts-explicit-potential-irish-psi-warning-1-.html