DBRS Morningstar upgraded its government credit rating to AA (low) by one level given the “enhanced macroeconomic resilience” of the economy during the Covid-19 crisis. The new rating is three notches below the agency’s top AAA rating.

“Ireland’s economic progress was on a path of high growth and diminishing vulnerabilities long before the onset of the pandemic,” the debt rating agency said on Friday evening, noting that the product gross domestic grew by 7.6% per year between 2017 and 2019.

DBRS says the “stable” trend it has on the new rating “reflects our view that Ireland is well placed to balance the negative credit implications resulting from the pandemic, global tax reform and of Brexit in relation to favorable growth prospects”.

The upgrade comes a day after the National Treasury Management Agency (NTMA) raised 3.5 billion euros by selling 10-year bonds, achieving more than a third of its minimum funding target on the year in less than two weeks in 2022.

The bonds, sold through a syndicate of banks and securities firms, were fixed at an interest rate, or coupon, of 0.387%.

The agency aims to raise 10-14 billion euros in the international bond markets in 2022, marking a drop of up to 46% from the amount raised last year as Covid-related government spending declines.

The NTMA welcomed the DBRS upgrade, saying it “reflects market sentiment and what we hear from our engagement with international investors.”

Still, DBRS said the Covid-19 shock had exacerbated what had long been an economy operating at two speeds, as multinational production outpaced domestic activity.


“Even with the recurring episodes of disruption to public health and social life over the past two years, Irish GDP grew by 5.9% in 2020, and the government expects an expansion of 15.6% in 2021. “, said the agency.

“As always, the strong GDP results should be viewed with caution. The growth rate reflects the strong performance of outward-facing sectors such as pharmaceuticals and [information and communications technology], and overestimates the wealth generation of the Irish national economy.

From a budget surplus in 2019, the public deficit swelled by 18.4 billion euros in 2020 before shrinking in 2021 to around 9 billion euros.

“This result outperforms its European peers, despite the Irish government implementing one of the largest counter-cyclical spending programs to support the economy,” DBRS said.

So far, the total budgetary response to the Covid-19 crisis has amounted to 48.4 billion euros, or 12.9% of GDP, of which more than 80% is intended to support employees, households and businesses as well as to increase health and investment spending, it is noted.