Image copyright AFP Image caption Ireland finally came out of recession last year

The credit rating agency Moody's has upgraded Ireland's debt from junk status to investment grade, saying its economy has growth potential.

The news is the latest in a run of positive reports for Ireland and comes as investors start to welcome the chance to invest in the country through its government-issued bonds.

Moody's was the only one of three key agencies to class the debt as "junk".

An investment grade mark means more investors can buy Irish debt.

Moody's has lifted its rating, which appear as a sometimes complex series of numbers from Ba1 to Baa3.

It says the recovering economy and its improved growth potential along with its return to the international bond market merit the higher score.

Ireland was effectively locked out of international credit markets after its banking collapse left only the European Union and the International Monetary Fund willing to support its needs.

The interest rate being demanded by investors to the country - a sign of investors' confidence - has fallen to 3.5% from 15% in mid-2011 on one key bond.

Ireland's Finance Minister Michael Noonan said: "Today's upgrade will have benefits for the economy as a whole by putting downward pressure on the price of credit for companies and organisations who are reliant on the markets for funding."

Official figures recently showed a stronger construction sector drove growth in Ireland's economy in the July-to-September quarter leaving gross domestic product up 1.5% quarter-on-quarter.