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Moody’s downgrades Cyprus by three notches
International credit rating agency Moody’s has announced that it downgraded Cyprus’s government bond rating by three notches to middle-range junk bond status, citing the anticipated increase in the government’s debt burden.
The downgrade on Thursday from B3 to Caa3 was driven by the further increase in the amount of government support that Cypriot banks are likely to require.
“Given that the resulting increase in the debt burden is likely to be unsustainable, Moody’s believes there is a significantly increased likelihood that the Cypriot government may eventually default outright or press for a distressed exchange,” Moody’s said.
Moody’s says more downgrades are possible for the country that is trying to finalise a bailout with international lenders to rescue its banks, which sustained massive losses on bad Greek debt and loans.
The agency said that it believes that there is a “significantly increased likelihood” that Cyprus may default outright or seek for its debt to be written down, but doesn’t foresee that happening this year.
It added however that its base case “does not assume a default or distressed exchange in 2013″.
Moody’s now estimates that the bank recapitalisations will be about 10 billion euros ($13.11 billion), which equates to more than 50 percent of GDP. That could take Cyprus’ ratio of debt to GDP to 150 percent in 2013, which “would be one of the highest levels in Moody’s rating universe,” Moody’s said.
More: http://www.aljazeera.com/news/europe/201…91275.html
2013-01-10 18:51:59
Source: http://yeoldefalseflag.com/thread-moody-s-downgrades-cyprus-by-three-notches
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