Third ratings agency places Cyprus on negative

FITCH ratings yesterday placed Cyprus’s AA- rating on a credit watch negative, saying it needed to assess risks to the economy from its exposure to Greece and from its state pension scheme.

Fitch said its review would be completed by April. In the event of a downgrade, it said it did not expect Cyprus’s long term foreign and local currency issuer default ratings to be lowered by more than one notch.

Its review, Fitch said, would focus on medium term fiscal risks facing Cyprus, including those of state pension schemes. It would also look at the risks in the economic, financial and banking relationships between Cyprus and Greece, following the latter’s sovereign rating downgrade on Jan 14, the agency said. Its AA- rating for Cyprus had been affirmed in June 2010.

Last week, Moody’s Investors Service warned Cyprus it could cut its Aa3 sovereign credit rating, citing its deteriorating fiscal standing and banks’ high exposure to Greece.

Standard and Poor’s had cut Cyprus’s sovereign rating in November by one notch to A, citing mainly the banking sector and its Greek exposure. (R)



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