Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
Eurogroup president Jean-Claude Juncker/AFP

Kenya

Moody’s cuts Cyprus debt ratings over Greek crisis

Eurogroup president Jean-Claude Juncker/AFP

PARIS, Mar 13 – Moody’s ratings agency said on Tuesday it had lowered its ratings on Cyprus’s government debt to junk status because of the impact of the crisis in neighbouring Greece on its banking system.

It cut its rating on long-term bonds to Ba1 from Baa3 and on short-term debt to “Not Prime” from “Prime-3” with a negative outlook.

The term negative outlook means that the agency does not rule out lowering the notations again in the medium term.

Cyprus had been at risk of this downgrade by Moody’s since the agency put it under negative watch at the beginning of November.

The decision makes Moody’s the second rating agency to classify debt issued by Cypris in the high-risk category.

Standard & Poor’s took a similar decision in the middle of January, lowering its notation by two notches to BB plus which is equivalent to a rating of Baa3 by Moody’s.

The third main agency Fitch Ratings downgraded Cyprus by one notch at the end of January to BBB minus.

The agency said it had changed the ratings because of the “increased risk that the Cypriot government would have to provide renewed financial support to the country’s banks because of their exposure to the Greek government and economy, and the commensurate impact of such measures on the government’s own financial strength.”

It had also taken into account “the likely impact on market confidence in Cyprus stemming from these banking-sector concerns, as well as broader uncertainties about Europe’s macroeconomic prospects and institutional frameworks.

“Overall, the fragile market confidence in Cyprus, which has already led to a loss of access to international debt markets, is likely to continue, with a high potential for further shocks to funding conditions for the sovereign and the domestic banks.”

Advertisement. Scroll to continue reading.

However, Moody’s said it had limited its action to one notch “in acknowledgement of the positive developments in Cyprus since Moody’s placed the country’s rating on review for downgrade in November 2011.”

It said: “In particular, Moody’s notes that the Cypriot government has now passed a large-scale fiscal consolidation programme, which contains a greater number of structural changes to public-sector expenditure than had been anticipated.

“These measures are likely to enable the country to achieve a deficit reduction of around three percentage points of GDP in 2012.”

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...