Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereign, sub-sovereign and supranational issuers. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Ireland (A+/Positive; S-1+/Stable) on 30 June 2020. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Ireland’s A+ sovereign ratings reflect the nation’s mature, diversified and high-growing economy, access to the European single market and euro area lenders of last resort, long average maturity of public debt, growing share of public debt held by the official sector via ECB bond purchases, and strong market access and government debt affordability. In addition, strong governance – re-anchored after formation of an historic coalition government in June – alongside enhanced banking sector cushions entering the 2020 crisis and a record of prudent fiscal management are credit strengths. Fundamentals have, nonetheless, deteriorated since early 2020: public debt levels will rise markedly this year as the economy contracts sharply and government deficits rise with sizeable stimulus spending. The economic slowdown, low rates and risks in global corporate debt and domestic property markets test, moreover, buffers built by financial institutions after a decade of restructurings and loan sales, while Irish private sector balance sheets are weakened. Brexit remains a risk during the second half of 2020. Presently, Scope judges that Ireland’s vibrant economic growth potential will be able to reverse a significant element of government balance sheet weakening from 2020 and that, in addition, the 2020 change in public debt owed to the private sector – the segment of sovereign debt rated by Scope – will not be as significant as that in the total public sector debt stock due to ongoing transfer of Irish debt from the private sector to the Eurosystem balance sheet.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Public Finance and Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Dennis Shen, Director

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