CRIPPLED by its exposure to Greece, Cyprus needs €17 billion from the euro zone to recapitalise its banks and to finance the government over the next three years.
S&P’s comments come as the island gears up for a runoff presidential election on Sunday pitting a conservative in favour of a swift bailout deal against a Communist-backed candidate who supports a bailout but with fewer harsh austerity measures.
“We see at least a one-in-three chance that we could lower the Cyprus sovereign ratings again in 2013, for example if official financial assistance from the (European bailout fund) ESM and/or IMF is not forthcoming, leaving the Cypriot authorities few choices apart from to restructure its financial obligations,” S&P’s head of EMEA sovereign ratings Moritz Kraemer said in a report.
“We could also lower the ratings if we believe the (Cypriot) authorities are not able to fulfil the conditions that would be attached to an official assistance programme.”
S&P currently rates Cyprus at CCC+, well into non-investment grade “junk” bond territory, with a negative outlook.
Cyprus asked for international aid eight months ago after its banks suffered huge losses on exposure to a restructuring of Greek sovereign debt and due to difficulties in accessing international capital markets shut to it because of fiscal slippage since mid-2011.
Reuters (London)
All the way across the world – banks are going to be squeezed now. And yes – the chickens do seem to coming home to roost.
It’s a going to be a spectacular mountain of bird droppings this time….
Is time for change. Is time for a new president with an open mind. With lots of experience not just in politics but in finance and international law. A president who is a true leader and will take responsibility for his actions. A president with a dream and a vision for his country and fellow citizens.
Nikos Anastasiades got the answers.
@Steve.
Similar happened to me.
My pension last month went astray, I was told it was in Germany, then the Laiki Bank, yet my Bank the Alpha knew nothing of this.
Eventually it had to be resent 2 weeks late.
Closed Alpha account now, being paid in the UK, not risking money disappearing!
All very strange.
Things must be hotting up with the banks in Cyprus. I tried to send some funds from HSBC to a neighbours account held at Cyprus Central Bank. I haven’t had any trouble in the past but this time it has taken weeks. After several frantic calls to HSBC it emerges that any transfers to CCB must now go through a bank in Frankfurt, Germany and then on to the beneficiary bank in Cyprus. No explanation was given by HSBC.
This bailout business has been dragging on for ages (since last June). It just seems endless. How difficult can it be? Aren’t the TROIKA supposed to be experts in these matters!
Cyprus to TROIKA “We want a loan”
TROIKA to Cyprus “Lets have a look at your books….. We have now decided how much we are prepared to lend you. These are the terms. Do you want the loan”
The above is probably a little bit simplistic! However, the delays just cause a lack of confidence for those involved. Regardless of how ‘slippery’ the Cypriot negotiators are the bottom line has to be that the TROIKA determine the rules of any loan. This is a voluntary process is it not? Cyprus did come begging did they not? Why must the TROIKA pussy foot around Cyprus. Tell us how it is. All this cloak and dagger stuff just makes me think corrupt dealings are at hand.
The TROIKA and all those involved must know all the tricks and if they are hoodwinked by Cyprus then that’s their own fault for being so stupid!
Even I can see the discrepancies just from reading the material available on the internet and I’m just an electrician!
What gives anyone the idea that Cyprus will adhere to the conditions of a bailout by IMF etc? The Cypriot government of whatever hue are well practised at turning a deaf ear to any threats. The EU have been at them for over five years regarding corruption in the property market and have achieved very little. Those in positions of power will just salt away funds for their retirement whilst everyone else suffers!
Chickens coming home to roost comes to mind.
No surprises here then. It’s the “and rising” that is particularly significant. Let’s just hope an incoming President and Government have the ability and ‘gumption’ to quickly get stuck in to addressing the now critical set of issues – and the fundamental structural problems that have contributed to the current mess. A Cyprus default could spell big problems for the entire Eurozone, not just the Island Republic.