IN A STATEMENT released yesterday, ratings agency Standard & Poor’s said it has cut Cyprus’ long-term sovereign credit rating from A to A- and the short-term rating from A-1 to A-2. This is the rating agency’s second cut in five months.
In its statement, S&P said: “Standard & Poor’s views the Cypriot financial system’s significant exposure to the Hellenic Republic as a ratings weakness for Cyprus in the context of the deterioration in the creditworthiness of the Greek government and the Greek financial sector.”
“In our view, the increasing likelihood that the Greek government will restructure its debt heightens the risk that a significant portion of the Cypriot government’s large financial sector contingent liabilities will become explicit liabilities migrating to the Cypriot government’s balance sheet.”
The outlook on the ratings remains negative.