Standard & Poor’s has upgraded its outlook on the Irish economy from ‘negative’ to ‘stable’ following last week’s promissory note deal.

The ratings agency said the exchange of promissory notes for long-date government bonds should reduce the government’s debt-servicing costs and lower the refinancing risk to the country.

It also stated that the deal increases the likelihood of Ireland’s full return to the bond market by the end of the year, marking an exit from the EU-IMF bailout programme.

Standard & Poor’s is the first ratings agency to revise its view, as it reaffirmed the country’s credit rating at BBB+/A-2.

However it warned Ireland still has a large deficit and the domestic economy faces uncertain growth prospects.

The agency added it could revise the outlook lower in the future if the country fails to comply with the EU-IMF programme.