Morgan Stanley is recommending investors buy Irish sovereign debt after the release last week of the 'credible' stress tests results.
In a research note, Morgan Stanley says the expected stabilisation of the Irish banking system would allow the economic turnaround already underway to boost investor confidence in Ireland's medium term debt sustainability.
The investment bank says that Ireland is still facing major challenges. 'But if there is one economy in the euro area than could meet these challenges, it is probably the Irish economy, we think,' it added.
Morgan Stanley says that Ireland is fundamentally different from the other peripheral countries as it a fully deregulated, fully liberalised market economy and should be able to adjust to the crisis more quickly.
It expects the economy to expand by 0.8% this year and a further 1.6% next year.
