Cyprus rat­ing cut be­cause of Greek ex­po­sure

Kathimerini English - - Business & Finance -

Fitch rat­ing agen­cy­cut Cyprus’s sov­er­eign credit rat­ing yes­ter­day from AA-to A-and is warn­ing of an­other pos­si­ble down­grade be­cause of its bank­ing sec­tor’s large ex­po­sure to Greece.

“The down­grade re­flects the sever­ity of the cri­sis in neigh­bor­ing Greece and the risk this poses for the Cypriot bank­ing sys­tem and con­se­quently the pub­lic fi­nances of Cyprus,” said Chris Pryce, di­rec­tor at Fitch’s Sov­er­eign Group, in a state­ment.

The agency said around one-third of the bank­ing sys­tem’s as­sets are booked as Greek ex­po­sure, in­clud­ing that of Greek bank sub­sidiaries based on the is­land.

De­spite the down­grade, Fitch said that Cypriot banks re­mained “rel­a­tively well placed” to ab­sorb losses on their Greek debt.

Fitch’s move fol­lows sim­i­lar down­grades by the rat­ing agen­cies Moody’s and Stan­dard and Poor’s in re­cent months based on sim­i­lar con­cerns.

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