[January 18, 2019]

KBRA Assigns A+/K1+ Ratings to the Republic of Ireland

Kroll Bond Rating Agency Europe Limited (KBRA Europe) assigns A+ long-term issuer ratings to the Republic of Ireland. KBRA also assigns K1+ short-term issuer ratings to the sovereign. The long-term ratings carry a Stable Outlook. The sovereign credit report is available here.

Main credit support factors:

• Ireland's open, competitive and wealthy economy benefits from elevated income levels and strong growth.
• Ireland is an attractive location for foreign investment owing to a stable regulatory regime, business-friendly corporate tax environment, ease of access to EU markets, well-educated workforce and top quality industrial standards and supervision.
• Active debt management significantly reduces refinancing risks and strengthens the government debt profile.
• Strong post-crisis economic management has been key to the country's enhanced economic resiliency.

Main credit concerns:

• Ireland's small, highly-open economic status leaves it vulnerable to shocks. Brexit, trade protectionism and international corporate tax reform pose notable challenges for Ireland.
• GDP distortions overstate the improvement in the government debt burden. Alternative measures such as debt-to-GNI* and debt-to-revenues highlight Ireland's sizeable debt burden.
• Foreign multinational corporations (MNCs) account for a sizeable proportion of the corporate tax intake, leaving government finances vulnerable in the event of MNC sector relocation.

KBRA's sovereign ratings of the Republic of Ireland reflect the country's very high level of economic development, elevated income levels, open and flexible economy and very strong post-crisis macroeconomic performance. The elevated government debt burden, external headwinds to growth and remaining risks in the banking sector, albeit receding, are the main rating constraints.

KBRA's ratings are based on the assumption that the United Kingdom's (UK) departure from the European Union ("Brexit") will prove manageable for Ireland. KBRA also expects that the December 2017 United States tax reform, alongside other international efforts at tax reform, will not materially impact the Irish economy. If either of these assumptions prove incorrect, KBRA would likely revisit the credit rating.

The ratings are based on KBRA's Sovereigns Rating Methodology published on 11 May 2017. Weights used for assigning these ratings are described in the methodology used for this credit rating action.

Disclosures

Further disclosures relating to this rating action are available in the EU Information Disclosure Form. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

Related Publications: (available at www.kbra.com)

• Sovereigns Rating Methodology
• Sovereigns Rating MethodologyRepublic of Ireland Rating Report

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190118005480/en/

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