Moody's upgraded Ireland to investment grade in January, handing the government a major boost a month after it completed the European Union/International Monetary Fund bailout.
With Irish debt already rallying, that upgrade further opened it up to investors prohibited from buying junk-rated paper. Ireland's bailout exit has been relatively smooth, having made a strong return to bond markets and with an economy set to grow about two per cent this year.
At the height of the euro zone crisis in July 2011, Moody's cut Ireland's rating to Ba1, one notch below former financial market pariah Colombia, and that prohibited large, mainly Asian-based ratings-sensitive funds from touching Irish debt.
Credit agency Moody's Investors Service upgraded Ireland's credit rating adding a further vote of confidence to the first euro zone country to complete an EU/IMF bailout last year.
"Ireland's credit profile is recovering more quickly from the euro area debt crisis as a result of its economy's dynamism and growth prospects," the credit agency said in a statement.
"However, Ireland's credit profile and rating remain constrained by the country's high public debt level, still-sizeable fiscal deficits and significant banking sector risks, including a high stock of non-performing loans."
Moody's raised Ireland's rating by two notches to Baa1 from Baa3 and with a stable outlook, saying a recent pick-up in growth momentum would speed up fiscal consolidation and cut government debt faster.
Credit rating agency Moody's has downgraded Britain's credit rating from AAA to AA1, Reuters are reporting.
Ratings downgrades for 15 global banks including Barclays and HSBC failed to rattle the sector this morning.
The review by Moody's credit agency was downplayed by the UK's major institutions, with Royal Bank of Scotland calling it "backward looking".
But the downgrades highlighted the risks posed by the eurozone crisis and combined with yesterday's dismal economic data in the United States helped drag the FTSE 100 Index 45.9 points lower to 5519.6.
Among the banks, RBS was down by around 1%, as it also battled major technical problems affecting its NatWest subsidiary.
Barclays slipped 1p to 201.3p and HSBC dropped 1.5p to 557.75p.
Economist Linda Yueh told ITV1's Daybreak that "these downgrades were well expected" and people are unlikely to "find a huge impact in terms of the borrowing costs".
Lloyds has reacted to the decision by Moody's to reduce its senior debt and deposit ratings by one notch to A2 from A1 and lower its standalone credit assessment to baa2 from baa1: