S&P downgrades Cyprus

S&P downgrades Cyprus


  
Ratings agency Standard & Poor’s on Thursday lowered Cyprus’s long-term rating to BB, pushing it into negative watch, saying the amount of global aid sought by Nicosia was 11 billion euros. “In our base-case scenario, we expect Cyprus will negotiate a financial support package of 11 billion euros, or just over 60 percent of Cyprus’s GDP,” a statement by the ratings agency said.
European Union member Cyprus in late June requested international assistance from the EU, the European Central Bank and the International Monetary Fund to cope with a crisis that is shaking its banking system and economy.
The amount of aid it asked for has not yet been officially quantified. Standard & Poor’s said it believes Cyprus government debt is expected to rise nearly 12 percent on average in 2012 and 2013, peaking at more than 105 percent of 2013 GDP. “We believe Cyprus’s short-term financing pressures are increasing as its negotiations with the European Union, ECB and IMF (troika) are unlikely to conclude before September, and significant uncertainty remains over securing bilateral funds,” it said.
Cyprus has requested a loan of 5 billion euros from Russia, which has significant interests in the Eastern Mediterranean island, but Moscow has yet to formulate its response. “We are therefore lowering the long-term sovereign credit rating on Cyprus to ‘BB’ from ‘BB+’ and placing it on CreditWatch with negative implications,” Standard & Poor’s said. It had already cut Cyprus’s rating by two notches in January, relegating it to speculative grade. The other two ratings agencies, Moody’s and Fitch, did the same. [AFP]


 
 


ekathimerini.com , Thursday August 2, 2012 (21:17)