Standard & Poor’s cut the sovereign long-term foreign currency credit rating on Cyprus deeper into junk status on Thursday, lowering the rating to CCC from CCC-plus as the country struggles with a banking crisis.
S&P said Cyprus’s domestic banks since early last year have repeatedly suffered losses because of write-downs on their holdings of Greek government bonds and credit losses on their Greek and domestic private-sector loans. The firm expects that the two largest Cypriot commercial lenders, the Bank of Cyprus and Laiki, will together require EUR10 billion in capital injections.
S&P considers Cyprus’s credit standing to be inextricably linked to its banking system and said neither the bank shareholders nor Cyprus’s government appear able on their own to meet the banks’ pressing capital needs.
(source: Βloomberg)
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