Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. 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/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly-rated peers; or through targeted reviews of an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Republic of Ireland (A+/Positive; S-1+/Stable) on 11 December 2020, incorporating the update from the sovereign methodology. The review resulted in no action on the assigned ratings. 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 ratings history can be found on www.scoperatings.com.

Key rating factors

Ireland’s long-term ratings at A+/Positive are underpinned by the following credit strengths: i) European Union and euro-area membership within a large common market, a strong reserve currency and access to regional lenders of last resort in the European Central Bank and the European Stability Mechanism; ii) strong national institutions and a wealthy, diversified and competitive economy that generates one of the highest per-capita incomes in Scope’s rated universe and robust growth potential; iii) a track record of fiscal discipline pre-crisis, alongside a long maturity of public debt, significant official-sector ownership of government debt as well as record-low borrowing rates; and iv) current-account surpluses and pre-crisis private-sector debt reduction and enhancements in financial-system resilience. Challenges relate to: i) still high public-debt levels when assessed against underlying economic activity – including deterioration during this year’s crisis; ii) the size and complexity of Ireland’s financial and corporate sectors, with significant leverage inside the financial system as well as the non-financial private sector and risks posed by future increase in non-performing loans; and iii) the economy’s vulnerability to sudden reversals when considered in the context of a small and very open economy due to shocks of either domestic or international origin.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 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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