Moody’s slashes Cyprus govt. bond rating

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 Moody’s Investors Service has downgraded Cyprus’s government bond rating by three notches, driving the country deeper into junk status.
On Thursday, the international credit rating agency slashed the country’s government bond rating from B3 to Caa3 over concerns that it may ultimately default on its rising debt level.

“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,” the agency said in a statement.

Moody’s also warned that more downgrades are possible for the country that is trying to finalize a bailout with international lenders to rescue its banks, which suffered huge losses on the EU-approved write-down on Greece’s debt.

Last month, Standard & Poor’s downgraded Cyprus’ credit rating by two notches to CCC+ over similar fears that it could default on its debts.

European countries plunged into a financial crisis in 2008, forcing EU governments to adopt tough economic reforms to cap their worsening debt crises. The measures have sparked many angry protests across the continent.

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