Moody's Investors Service has upgraded the credit ratings of Bord Gáis and the ESB.

The agency said the rating upgrade followed the raising of Ireland’s government bond rating to investment status.

Both the ESB and Bord Gáis were upgraded by one notch to Baa2, two notches above junk status.

New York-headquartered Moody’s also changed the outlook for Ireland’s utilities from stable to positive.

Moody’s said the upgrades recognise that Bord Gáis and the ESB’s ratings are constrained by Ireland’s government bond rating.

“Notwithstanding the deterioration in the macroeconomic environment, Bord Gáis has effectively managed the challenges associated with maintaining cash flow, key financial metrics and liquidity,” Moody’s said.

With regard to the ESB, Moody’s noted how revenue has increased year-on-year since 2010 with cash flow generation supported by effective management of costs.