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Cyprus economy downgraded again

Standard and Poor’s has downgraded Cyprus’ sovereign credit rating by one notch and set the outlook as ‘negative’ as a result of the Island’s significant exposure to Greece.

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.

Readers' comments

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  • Robert Briggs says:

    (re; Mr John Swift’s e-mail). Dear Sir, As well as reducing property prices. It has to be based on a decent legal footing, with good building & insulation standards plus proper guarantees. Instead of the rubbish you have got at present.

  • John Swift says:

    WE constantly hear of the semi stagnant property market in Cyprus, when will it become the accepted fact that Cyprus property is vastly overpriced.

    Cyprus property prices used to be lower than the UK but now they’re much higher. Buy sell regularly send out emails with fantasy land property prices.

    It is about time that property prices became more realistic which would create more interest from overseas buyers. At one time you could sell a UK property and have money left over but now if you sell a UK property you’ve got to find the difference to purchase an overpriced Cyprus property.

  • There was an interesting article in yesterday’s Cyprus Mail on this subject:

    “PRESIDENT Demetris Christofias yesterday blamed an ‘alliance’ intent on harming the government for a downgrade of the country’s debt rating by Standard and Poor’s, saying his administration could assume no blame for the cut.”

    Has McCarthyism come to Cyprus?

  • @So Over in Cyprus – thanks for your comment.

    When S&P downgraded Cyprus’ sovereign credit rating in November last year, their statement said “In addition, the relative size of Cyprus’ domestic credit, which stands at 280 percent of GDP, is among the highest in Europe. Much of it is collateralized by property assets, which have suffered an overall decline in value in the last two years”.

    You can read that earlier article by clicking here.

  • So Over Cyprus says:

    What disturbs me is that these organizations downgrade Cyprus based on it’s exposure to Greece, not the endemic corruption of the Cypriot banks on their own. Not to mention the corruption of the government, lawyers, developers etc.

    If Standard and Poor’s were to announce a downgrade based on the Cypriot bank’s bad mortgage practices, spiralling property prices, title deed fiasco and government problems, that would get the world’s attention. It would then be a true reflection of the risk in Cyprus, not just it’s exposure to Greece.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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