Ireland back to investment grade

Moody's has taken Ireland back to investment grade (Baa3) from dropping it to junk status after the Great Financial Crisis. S&P has it rated BBB+ and Fitch BBB+. Ireland went from Aaa to Aa1 in July 2009 anf dropped to junk in July 2009. S&P had it rated AA+ in March 2009 and took it down to BBB+ and negative watch  in December 2011. 

This has been a significant turn-around for a country that was on the brink of financial chaos. The Irish central bank is now projecting growth of 2.1% in 2014 and 3.2% in 2015. Not great but above peers in the EU. 5-year CDS spreads have fallen to pre-crisis levels at 108 bps. 

Why focus on tiny Ireland? Here was a true crisis in banking. The economy suffered with the real economy falling over 7 percent yoy in the fourth quarter of 2008. Growth did not return until 2010 and even 2013 growth in the first two quarters was negative. Still, the government was able to patch together a sound plan to get ratings up. It is painful but it can be done. This is the key message. There is survival from a financial crisis.