Moody's raises Ireland's credit rating to A3

May 14 (Reuters) - Moody's raised Ireland (Other OTC: IRLD - news) 's credit rating to 'A3' on Saturday, saying in a release from London that growth in Ireland has been better than expected in recent months.

Ireland, Europe's fastest-growing economy, has now won back its 'A' rating from all the major ratings agencies.

Moody's raised Ireland's rating by one notch to A3 from Baa3 and with a stable outlook. Still, the agency said in a statement that the UK's exit from the European Union will also have a negative impact on Ireland due to its close economic ties with Britain.

Moody's was the only agency to cut Irish debt to junk in 2011, months after Dublin entered a three-year international bailout.

The upgrade came a week after Enda Kenny was re-elected prime minister to end 10 weeks of political deadlock as head of a minority government that many analysts believe will be short-lived amid Ireland's newly fractured parliament.

Ireland's economy grew almost 8 percent last year, and is forecast to expand by close to 5 percent this year to remain the best performing economy in the European Union for a third successive year.

That growth should cut Ireland's gross debt below 90 percent of gross domestic product by the end of the year, the country's finance ministry has predicted. Ratings agencies have been impressed by that sharp reversal from a peak of 125 percent during 2013.

S&P was the first of the three major agencies to hand Ireland back its 'A' rating two years ago.

Fitch returned Ireland to the top grade in 2014 and raised its credit rating a notch to 'A' in February. DBRS, the world's fourth-largest ratings agency, maintained its 'A' rating of Irish debt throughout the crisis.

Dublin can borrow from debt markets at record low rates. It sold 750 million euros of 6-year debt on Thursday at a yield of just 0.16 percent - and Moody's reinstatement of its 'A' rating could open up its debt up to new investors.

Ireland's 10-year government bond yield fell to a one-month low on Friday, outperforming euro zone peers ahead the long sought after upgrade. (Reporting by Padraic Halpin in Dublin and Parikshit Mishra in Bengaluru; Editing by David Gregorio)