MOODY’S Investors Service has downgraded the senior unsecured debt and deposit ratings of three Cypriot banks to Caa2 and lowered the standalone credit assessments of two of those banks, Hellenic Bank Public Company Ltd to caa3 from caa2 and Cyprus Popular Bank Public Co Ltd to ca from caa3.
In its statement, Moody’s said that it rating actions are triggered by the downgrade of Cyprus’ government bond rating to Caa3 and they reflect:
- uncertainty regarding the timing and conditions of a finalised Memorandum of Understanding (MoU) between the Cypriot government and the International Monetary Fund, the European Union and the European Central Bank to finance bank recapitalisations;
- heightened risk of sovereign default, which could jeopardise the effectiveness of bank recapitalisations once the external support programme is in place; and
- the associated impact of increased sovereign credit risk on banks’ standalone credit profiles, given the banks’ sizable portfolios of government securities.
The three affected banks are:
- Cyprus Popular Bank Public Co Ltd: Senior unsecured debt and deposit ratings downgraded to Caa2 from Caa1; standalone credit assessment lowered to ca from caa3, within the E standalone bank financial strength rating (BFSR) category.
- Hellenic Bank Public Company Ltd: Deposit ratings downgraded to Caa2 from B3; standalone credit assessment lowered to caa3 from caa2, within the E standalone BFSR category.
- Bank of Cyprus Public Company Limited: Senior unsecured debt and deposit ratings downgraded to Caa2 from Caa1; standalone credit assessment of caa3 remains unchanged within the E BFSR category.
The outlook on the banks’ senior debt and deposit ratings is negative.
Just where is Charilaos ‘everything is rosy in the garden’ Stavrakis when you need him most? I ask you!