Bank of Ireland shares rise amid stock, debt rating upgrades

Bank of Ireland shares rose as much as 2.3 per cent on Wednesday as Standard & Poor's upgraded its rating on the lender's credit-worthiness, and investment firm Merrion Capital raised its stance on the company's stock to outright "buy".

The bank’s shares rose to as high as €6.86 on the Dublin stock market.

Standard & Poor’s (S&P) raised its rating on Bank of Ireland by one level to “BBB+”, highlighting how the group raised the equivalent of €1.18 billion since mid-August from the sale of senior unsecured bonds that can be “bailed in” in the event of a future financial crisis.

S&P also noted how the bank’s common equity Tier 1 capital ratio, a gauge of a lender’s ability to withstand shock losses, was 14.1 per cent at the end of June, above its medium term target of at least 13 per cent.

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Meanwhile, Merrion Capital analyst Darren McKinley said in a note to clients that Bank of Ireland’s shares are undervalued by the market following a recent sell-off and that management should consider launching a €250 million share buyback over the next 12 months.

Mr McKinley had previously downgraded his rating on Bank of Ireland’s stock to “hold” in early August on valuation grounds.