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Cyprus may be further downgraded by Fitch

Cyprus faces the prospect of a further ratings downgrade by the end of the month after credit ratings agency Fitch repeated its intention to downgrade the Island and five other eurozone countries.

SPEAKING in Madrid on Thursday, Fitch senior director Ed Parker said the agency was likely to cut the ratings of six euro nations by one or two notches by the end of this month.

Fitch, the third-largest rating agency, placed Belgium, Cyprus, Ireland, Italy, Slovenia and Spain on credit watch “negative” in mid-December, signalling the possibility of a downgrade within three months. At that time, Fitch said that the absence of a “comprehensive solution” to the region’s debt crisis was the reason for placing the six countries’ ratings on credit watch negative.

Cyprus has a BBB rating from Fitch.

Last week Cyprus was downgraded by ratings agency Standard & Poor’s along with eight other European countries. As a result, France and Austria lost their coveted AAA rating, while Cyprus was downgraded to junk status.

In response to that downgrade, Finance Minister Kikis Kazamias said that Standard & Poor’s decision on Cyprus was arbitrary and unsubstantiated and that the ratings agency had acted in a high-handed manner.

On Thursday Fitch’s Mr Parker, who was speaking at a conference in Madrid, said that the review would be concluded by the end of January.

Readers' comments

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  • Peter says:

    I’m due to pay for my title deeds (just been made available after nearly 10 years).

    Are they half price or is Cyprus so short of money it will need to impose a full amount? Receiving conflicting information from the developer who appears as confused as me.

    (Peter – you will not be entitled to a reduction in your Property Transfer Fees – see Transfer fee abolition/reduction law published at last!)

    Don’t think this will save Cyprus from Fitch though.

  • David says:

    Oh what a tangled web we weave !!

    Do the Greeks and Cypriots believe that the US and UK “leaders” are really that intelligent. For years past we have found that “things…. happen” and the Governments have never planned fully for “events” !!.

    If they are all so clever, why didn’t they see the Credit Crunch coming or the Banking crisis.

    Life was never fair, so come on Cyprus shape up or ship out.

    From someone who loves Cyprus and the Cypriot people.

  • James JH Lockhart says:

    Thanks to Denton & Gavin and other posters you summed up LaLa land so well.

  • Gavin Jones says:

    It’s certainly a big relief to have it confirmed that the recent S & P downgrade ‘junk’ status awarded to Cyprus, with probably more to follow, AND the island’s ills, have been created by ‘outside forces’ and follows the similar line adopted by Syrian supremo Assad that outsiders are to blame for the unrest in his country.

    In Cyprus it’s the British (with their double-dealing and seeding the sky with chemicals), Americans, EU, Alexander Downer, MI6, Turks (naturally), Rating Agencies (as they’re American they must have been put up to it by the CIA), whingeing expatriates (predominately in Paphos), CIA (on their own account), Eskimos, property action groups, CIA, Paraguayans, UN and anyone else you may care to mention.

    The following can be discounted:

    Incompetent leadership, self-serving politicians, crooked lawyers, convicted policemen allowed to remain in the service, unscrupulous banks, overstretched developers, dreamland foreign policy decisions (“The Russians are our friends”), rampant nepotism, storage of explosives next to power stations, overt corruption, bloated public service, disrespect for the state by the granting of presidential pardons to drug traffickers and lawyers, etc., etc., etc.
    (On the other hand, these too could be CIA inspired with a little help from MI6).

  • C. Woodward says:

    Sadly to use that phrase ‘You reap what you sow’. Single mindedness and lack of future vision has led to the inevitable!

  • Denton Mackrell says:

    Conspiracy or simply brutal honesty? Hard to tell. Or perhaps it’s both!

    I agree with Mike. Only last night, I had a well meaning Cypriot telling me that:

    1. Cyprus universities were superior in quality and output to those of the UK,
    2. Larnaca desperately needs a university to cater for all those local students who currently have to travel to Nicosia,
    3. only candidates not good enough for the Cyprus universities have to go the UK or USA,
    4. the Cyprus economy and Cyprus generally is the victim of a vast external conspiracy led by the USA and Israel (wot, no UK?!) to take over Cyprus,
    5. the USA is about to replace Christofias with someone more to their liking (my comment that with such power the USA must have ensured
      Christofias got in the first place, was ignored!).

    With such paranoid delusions of grandeur driving thought and action here, the prospects for a good outcome on any subject look very, very dim.

  • Edward Smyth says:

    These rating agencies and the downgrades are not making much sense and their agendas are becoming more and more suspect. Conspiracy comes to mind.

  • stuart says:

    @ Mikes comment may have been tongue in cheek but his very last word “conspiracy” sums up the agenda of those countries with “muscle”.

  • Mike says:

    I for one do not believe there is anything wrong with our economy or economic prospects because our previous finance minister kept saying so in the press and on TV and it was in colour so it has to be true.

    Cyprus’ economy is different, very strong, banks are well capitalised and so there is nothing to worry about, I remember him saying so.

    You lot are only viewing the economy and its prospects from an overall, universal viewpoint, take a look at it from 40 centimetres under the sand at the Limassol Amathus Beach and look downward rather than upward. It looks absolutely rosy and fine from that viewpoint, nothing wrong at all so therefore if there might be the slight chance of anything being other than it should be then it is obviously due to some outside capitalist conspiracy.

  • Martyn says:

    Maybe, just maybe!, the Finance Minister & President will start to believe the current economic hole(s) the country is in. Who will they blame next?

  • Geo says:

    “In response to that downgrade, Finance Minister Kikis Kazamias said that Standard & Poor’s decision on Cyprus was arbitrary and unsubstantiated and that the ratings agency had acted in a high-handed manner”

    Typical Cypriot answer, everyone is to blame but us.

    Surprised they have not sued Standard & Poor’s!!!

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