YEREVAN, July 4. /ARKA/. Rating Agency Standard and Poor`s raised on Wednesday Cyprus` long-term foreign and local currency sovereign credit ratings to `CCC+` from `SD` (selective default) with a stable outlook, following the successful exchange of €1 billion government bond`s with longer maturities, RBC reported citing Reuters.
At the same time, S&P`s raised its short-term foreign and local currency sovereign credit ratings on Cyprus to `C` from `SD`.
According to S&P`s rationale, the upgrade reflects two other factors the easing of the government’s immediate liquidity constraints, due to the disbursement of the €1 billion tranche by the European Commission Union the European Central Bank, and the International Monetary Fund , also known as the Troika, as well as the extension of the €1.8 billion bond, issued to Cyprus Popular Bank (now transferred to Bank of Cyprus) which came due on June 28, for one year to July 1, 2014, in accordance with the bond`s original terms.
The agency notes that Fiscal reserves of approximately $1.7 billion also suggest that immediate liquidity pressures have lessened, noting that the government still needs to rollover its stock of €950 million Treasury bills (5% of GDP).
On March 25 Cyprus and the Euro zone Finance Ministers agreed on a €10 billion bailout, featuring a haircut on uninsured banking deposits. Cyprus banking sector was subjected to significant downsizing, as the bank`s Greek operations have been sold, whereas the island`s largest lender, Cyprus Popular Bank will be wound down with its good part absorbed by Bank of Cyprus. -0-
