CREDIT RATING AGENCY Morningstar DBRS has upgraded Ireland to AA on its metric that gauges the ability of countries to meet their financial commitments and repay long-term debts.

Morningstar DBRS is the world’s fourth largest credit ratings agency and is one of only four such agencies to be recognised as an external credit assessment institution by the European Central Bank.

Its sovereign debt rating system goes from AAA to C, with further low and high levels available within each category expert for the top-of-the-chart AAA rating.

Ireland was previously rated AA (low) and was today upgraded to AA.

It’s Ireland’s first upgrade from Morningstar DBRS since January 2022.

A spokesperson for the Department of Finance said the upgrade “reflects an expectation that Ireland’s strong fiscal position will persist over the medium-term”.

The spokesperson added that the establishment of the two new long-term savings funds – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – will help manage the risks around windfall tax revenues.

The Future Ireland Fund deals with future recognised expenditure pressures including an ageing population and climate change, while the Infrastructure, Climate and Nature Fund seeks to assist with climate change objectives and nature, water quality and biodiversity issues.

Finance Minister Jack Chambers said the move is a “recognition of the fundamental strength of our economy”.

However, he added: “We know that the very positive headline figures mask underlying risks that we must be cognisant of. 

“The fiscal position remains heavily exposed to volatile ‘windfall’ corporate tax revenues paid by just a small number of highly profitable firms which is why the establishment of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund is such a positive and important development.”

The National Treasury Management Agency (NTMA) meanwhile remarked that in making its decision, Morningstar DBRS pointed to the establishment of the Future Ireland Fund and Infrastructure, Climate and Nature Fund as part of its reasoning for the upgrade.

Dave McEvoy, Director of Funding and Debt Management at the NTMA, said the upgrade “reflects Ireland’s continued strong economic performance and is consistent with international investor sentiment”.

“Today’s upgrade is underpinned by a range of factors including the improvement in Ireland’s fiscal position, as well as a favourable debt structure,” added McEvoy.

Today’s move follows a similar upgrade by Fitch Ratings in May, which boosted Ireland from AA- to AA.