South Cypus downgraded to Junk Status

Ratings agency Moody’s has downgraded South Cyprus’s credit rating to Ba1 which is junk status. The reason for this is the exposure of the Banking Sector to Greece’s debt with the possibility that loans made to Greece will only be partially repaid. Moody’s is also assigning a negative outlook to Cyprus, meaning that future downgrades are also possible. In January Standard & Poor’s had also downgraded to junk status whereas Fitch rates South Cyprus a notch above junk.

It is still too early to know the impact on banks of possibly losing around 75% of the money loaned to Greece but it is speculated that the government in the south will be forced to support their banks to prevent adverse effects to the economy

Print Friendly, PDF & Email

Comments are closed.