Standard & Poor’s Ratings Services downgraded Cyprus’s sovereign ratings three notches further into junk territory, saying the island nation’s creditworthiness had deteriorated significantly since its ratings were lowered in August, The Wall Street Journal reports.
S&P has Cyprus at B, or five levels into junk category, and said the ratings remain on review. The ratings firm had cut Cyprus’s rating to double-B in August, putting it two levels into junk territory and placed it on watch for further downgrade.
S&P noted that the government hasn’t negotiated a critical loan package, while the nation is facing a severe banking crisis, deteriorating consumer and investor confidence, and exposure to Greece’s debt and economic crises. A further downgrade is possible if Cyprus’s financing pressures escalate, S&P said.
S&P’s downgrade comes slightly more than a week after Moody’s Investors Service lowered Cyprus’s bond ratings three notches further into junk, citing the “profound difficulties” in the island nation’s banking sector. Moody’s downgraded Cyprus’s ratings to B3, placing it six levels into junk territory. The downgrade ended a review launched in June. The outlook is negative.
In June, Fitch cut its rating on Cyprus to double-B-plus, one level into junk territory.