CYPRUS’ Securities and Exchange Commission (SEC) was yesterday trying to get the Fitch rating agency to expedite an announcement on Cyprus, after rumours of an impending downgrade caused heavy losses in the stock market last week.
Rumours on Friday suggested that Fitch will today announce a downgrade of the Cypriot economy.
Coupled with the fact that Greek political parties failed to agree on the measures needed to pull the country out of the crisis, it prompted a 4.77 per cent drop of the stock market with banks – that are exposed to Greek debt – being the hardest hit.
“We examined the matter and we think that everything possible should be done to speed up publication of the Fitch decision to preserve the credibility of the market,” SEC chairman Giorgos Charalambous said. “From the moment the information has been leaked we should see how to expedite the announcement to end the uncertainty over the issue.”
Yesterday was a bank holiday in Britain.
Charalambous said the option of suspending trade yesterday had been discussed with the chairman of the stock market Giorgos Koufaris but it was decided that keeping the market closed would not be to the benefit of the economy.
Unlike Standard and Poor’s and Moody’s, Fitch has not downgraded Cyprus so far but has placed the island on credit watch negative.
In April, Standard and Poor’s downgraded Cyprus one notch to A-, citing concern at the exposure of the island’s banks from a potential debt restructuring in Greece.
Moody’s has also lowered Cyprus’ sovereign bond rating two notches to A2, citing concerns over structural problems in the economy and exposure of Cypriot banks to indebted Greece. It also lowered the ratings of banks.
Asked about the matter on Saturday, Finance Minister Charilaos Stavrakis said Fitch’s review was a matter of time but there was nothing concrete.
Central Bank Governor Athanasios Orphanides told reporters there was nothing to comment on in the absence of an official announcement.
Both Stavrakis and Orphanides agreed that the island’s financial system must be bolstered.
“Because we are a small country with a large, developed, financial system we want to preserve since it brings us a lot of wealth, we must try and bolster our economy and financial sector as best as we can,” Orphanides said.
He said Cyprus should focus on two axes: further strengthening of the finance sector and the banks and improving the public finances.
