Fitch cuts Cyprus rating to junk status

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FXstreet.com (Barcelona) - On Monday Fitch rating agency announced a downgrade of Cyprus's rating by one notch from BBB- to BB+, with a negative outlook. The agency justified its decision by pointing to the increased bailout funding needs of the country's banks, resulting from their considerable exposure to Greece.

According to the official release: "The downgrade of Cyprus's sovereign ratings reflects a material increase in the amount of capital Fitch assumes the Cypriot banks will require compared to its previous estimate at the time of the last formal review of Cyprus's sovereign ratings in January 2012. This is principally due to Greek corporate and households exposures of the largest three banks, Bank of Cyprus, Cyprus Popular Bank ( CPB ) and Hellenic Bank and to a lesser degree the expected deterioration in their domestic asset quality."

It is expected that Cyprus will shortly ask for an international bailout to rescue its banks.



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This article appears in: Investing , Forex and Currencies

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