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The rating company kept Ireland’s BBB+ grade unchanged and raised the outlook to positive from stable. S&P said there’s a one-in-three chance the rating will rise in the next two years. “Ireland’s general government debt burden is likely to decline more rapidly, as a percentage of GDP, than we had previously expected”, S&P said in a statement today. “Ireland’s economic recovery is under way.”
S&P said Ireland’s government debt will peak at 122 per cent of gross domestic product this year and decline to 112 per cent by 2016. The report also cited the “strong consensus” among the country’s largest political parties to maintain policies to cut the debt and boost the economy’s competitiveness. Housing prices should bottom out in 2013.
The report warned that Ireland’s private-sector’s access to external funding remains “fragile”, and that its banking sector has a high and rising levels of non-performing loans.