Moody’s downgrades Cypriot bonds
Moody’s Investors Service downgraded Tuesday (13/03/2012) Cyprus’ government bond ratings by one notch to Ba1 from Baa3, assigning a negative outlook to the ratings, citing increased risk for the government to provide financial aid to Cypriot banks due to their exposure to Greek bonds and the Greek economy.
Outlining the rationale behind its decision, Moody’s cites
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 also cites
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
Source: Cyprus News Agency