The leader of Moody's Irish team has said the ratings agency decided against raising Ireland's rating because of our high debt level and the impending general election.
In an interview with Bloomberg, Kathrin Muehlbronner said the uncertainty around the result of the election left question marks over what kind of fiscal policy the government would pursue.
The ratings agency surprised analysts last week when it decided against lifting Ireland to an A grade.
It now looks likely that Moody’s will wait until after elections before deciding whether to upgrade Ireland, she said.
Moody’s awarded Ireland its top grade in 1998 before cutting it to junk in 2011 after the collapse of the property market which led the country into an international bailout.
The company upgraded Ireland twice last year as the economy started to expand at the fastest pace in the euro region.
Danske Bank A/S in Copenhagen said last week an upgrade 'should be a done deal.'
Instead, Moody’s left the rating unchanged, while raising the outlook on Ireland to positive from stable, a move Cantor Fitzgerald LP called a 'consolation prize.'
"Although disappointed, we were not totally surprised by Moody’s stubbornness, as we have been consistently puzzled by their Irish stance," said Ryan McGrath, an analyst at Dublin-based Cantor.
"Moody’s opinion seemed to be more static or snap shot and less forward-looking than that of markets."
The spread between Ireland’s 10-year benchmark government bond and German securities of a similar maturity has dropped to 60 basis points from 298 basis points just over two and a half years ago.
Yields on 10-year Irish government bonds have plunged to 1.32% from 14.2% in July 2011.
Ratings agencies Standard & Poor’s and Fitch returned Ireland to the A-grade club a year ago.
Without an A grade across the three ratings companies, some investors aren't allowed buy Irish debt.
