Moody΄s Investors Service announced on Thursday that it downgraded Cyprus΄s government bond ratings by two notches to A2 from Aa3, reflecting its view of the country΄s weakening medium-term credit fundamentals.
Moody’s said that the key drivers for the rating action are:
1. Concerns that the deterioration in the Cypriot government΄s fiscal metrics, relative to levels recorded prior to the financial crisis, is largely structural;
2. The banking sector΄s exposures to macroeconomic stress in Greece; and
3. Concerns about the country΄s competitiveness.
Cyprus΄s country ceilings for bonds and bank deposits are unaffected by Moody΄s ratings review and remain at Aaa, according to Moody’s.
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