DUBLIN, April 1 (Reuters) - Ratings agency Standard & Poor’s on Friday downgraded Ireland’s sovereign credit rating by one notch to BBB+, citing future risks to bond holders, but said its outlook was stable.
The downgrade comes after the government revealed a 24 billion euro capital hole in the country’s four main banks following a stress test, a result the agency said was “within (its) range of expectations, albeit at the upper end.”
S&P said the robust assumptions underlying the stress tests had allowed it to move the outlook from negative to stable.
“We are of the opinion that the sharp contraction in Ireland’s nominal GDP and gross national product since 2008 has reached an end, and that the Irish economy is now set to gradually recover,” the statement said.
“We believe that the Irish economy has stronger growth prospects than the Portuguese and Greek economies considering its openness, its flexibility, and its competitiveness,” Standard & Poor’s credit analyst Frank Gill was quoted as saying.
Were the financial system to require additional capital injections from the state or were the Irish government to significantly fall short of its ambitious fiscal targets, the rating could come under downward pressure, the statement said.
Reporting by Conor Humphries; Editing by Ron Askew