Rating agency Moody's has today upgraded the deposit ratings of three Irish banks - AIB, Bank of Ireland and Permanent TSB.
Moody's said it made the move due to the sharply improved operating environment for the three lenders.
The agency said that capital market conditions for the Irish banks have materially improved, with the three largest domestic banks able to issue capital and hybrid capital instruments last year.
Moody's said it believes that Irish banks will continue to maintain their access to the market at competitive prices this year, and will potentially increase their debt issuance.
It also noted that while Irish private sector debt remains very high compared to other European countries', it is rapidly declining.
"The Irish banking sector remains highly concentrated, which provides banks with pricing power," the agency added.
"The main driver for the rating actions is the improvement in credit conditions in the banking system following the rapid and material deleveraging of the private sector, as well as stronger funding conditions as most banks have regained the ability to issue different debt instruments. These positive developments have been reflected in an increase in Moody's Macro Profile for Ireland," commented Laurie Mayers, an Associate Managing Director at Moody's.
"The rating actions also incorporate the strengthening of the banks' credit fundamentals, especially the progress they have made in reducing non-performing assets, improving the quality of earnings and strengthening their capital metrics," Moody's added.