May 31, 2014
Upgrade evaluations of Cyprus by S & P and Fitch
The rating agencies Standard and Poor’s and Fitch upgraded the ratings of Cyprus today, a development which is considered as positive progress in the implementation of the restructuring program and achievement of financial goals.
Rating agency Standard and Poor `s upgraded by one notch its long-term credit rating of Cyprus, “better than anticipated economic and fiscal performance” as they supported. Specifically, the agency raised its long-term rating of Cyprus from “B -” to “B” keeping the short-term rating at “B”. This is the second upgrade by S & P `s after 29 November 2013. Furthermore, the Cypriot GDP shrank less than expected last year and it is believed that Cyprus is likely to exceed its financial targets for the current year, says the firm. It notes that the conditions of the economic adjustment program exhibits. It states that the economic performance of the island will continue to improve.
The rating agency Fitch has upgraded the long term rating for Cypriot domestic currency “B -” from “CCC” keeping evaluating issuer for foreign currency in “B -“.
Moreover, assessment of the country (country ceiling) confirmed the ” B”, while ratings for senior unsecured bonds of foreign law has been confirmed in the “B-“ and the ratings for the unsecured bonds Cypriot law have been upgraded to “B –“ from “CCC”. In explaining its decision, the agency notes that the fiscal targets were exceeded with significant effort and that the economy has been more resilient than expected. “The economy has been more resilient than expected’’ says Fitch, recalling that the Cypriot GDP shrunk by 5.4 % compared with the predictions of the Troika to shrink 7.7 %. This was due to the tourism and services sector, and the use of deposits from households, which reduced the private consumption. Meanwhile, Fitch has revised upwards its forecast for GDP contraction of 3.9 % compared with the previous forecast of 5.1 %.