Data provided by McGregor BFA
All data is delayed
Loading...
See More

Moody's cuts Cyprus debt ratings

Mar 13 2012 10:50 AFP

Related Articles

Gordhan takes swipe at rating agencies

Moody's downgrades five SA banks

Moody's threatens 17 banks with downgrade

Markets dip as Moody's spooks Europe

Moody's cuts ratings, outlooks on nine in EU

Moody's: Outlook for SA banks stable

 

Paris - Moody's ratings agency said on Tuesday it had lowered its ratings on Cyprus's government debt to junk status because of the impact of the crisis in neighbouring Greece on its banking system.

It cut its rating on long-term bonds to Ba1 from Baa3 and on short-term debt to "Not Prime" from "Prime-3" with a negative outlook.

The term negative outlook means that the agency does not rule out lowering the notations again in the medium term.

Cyprus had been at risk of this downgrade by Moody's since the agency put it under negative watch at the beginning of November.

The decision makes Moody's the second rating agency to classify debt issued by Cypris in the high risk category.

Standard & Poor's took a similar decision in the middle of January, lowering its notation by two notches to BB plus which is equivalent to Moody's Baa3 rating .

The third main agency, Fitch Ratings, downgraded Cyprus by one notch at the end of January to BBB minus.

The agency said it had changed the ratings because of the "increased risk that the Cypriot government would have to provide renewed financial support to the country's banks because of their exposure to the Greek government and economy, and the commensurate impact of such measures on the government's own financial strength".

It had also taken into account "the likely impact on market confidence in Cyprus stemming from these banking sector concerns, as well as broader uncertainties about Europe's macroeconomic prospects and institutional frameworks.

"Overall, the fragile market confidence in Cyprus, which has already led to a loss of access to international debt markets, is likely to continue, with a high potential for further shocks to funding conditions for the sovereign and the domestic banks."

However, Moody's said it had limited its action to one notch "in acknowledgement of the positive developments in Cyprus since Moody's placed the country's rating on review for downgrade in November 2011".

It said: "In particular, Moody's notes that the Cypriot government has now passed a large-scale fiscal consolidation programme, which contains a greater number of structural changes to public sector expenditure than had been anticipated.

"These measures are likely to enable the country to achieve a deficit reduction of around three percentage points of GDP (gross domestic product) in 2012."

cyprus  |  greece
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...