Credit rating agencies S&P and Fitch upgraded the rating of Cyprus
International agency Fitch Ratings raised its forecast long-term issuer default rating of Cyprus in foreign currency from “negative” to “stable”, leaving it at “B-“. Simultaneously the credit rating of the country in local currency upgraded from “CCC” to “B”, according to the agency.
The basis for these decisions is the continuing process of implementation by the Cyprus authorities. Agency analysts also note that “the risk of recurrence in Cyprus restructuring has been reduced, as in 2013, domestic bonds, which led to a long-term rating of the issuer alignment in local and foreign currency.” “This alignment provides an improved budget and economic indicators relative to previous forecasts of Fitch, which leads to creating stronger financial stocks as part of the stabilization program,” – said in a statement.
In general, Fitch experts recognize that the Cyprus economy was “more resilient than expected.” GDP in 2013 decreased by 5.4% against the projected previously 7%. Budget deficit in 2013 amounted to 5.4% of GDP, although the “Troika” of international lenders expected that this figure would be 7.8%, and Fitch – 6 7%. In this regard, Fitch has revised its forecast for economic contraction of the republic in 2014 from 5.1% to 3.9%.
However, the agency warns that “creditworthiness of Cyprus continues to be exposed to significant risks.” In this regard, the agency draws attention to the huge amounts of non-performing loans in the banking sector, which have reached 42% at the end of December, and in some banks exceeded 50% of the total loans disbursed.
Outlook from S&P
International rating agency Standard&Poor’s (S&P) has upgraded the long-term rating of Cyprus in foreign and local currency from “B-“ to “B” with a “positive” outlook. That was the agency said. Short-term rating, agency confirmed at B.
Source: Vestnik Kipra, Itar-tass