Moody`s rating agency on 28th July 2017 has upgraded government bond ratings of Cyprus by one notch, to Ba3 from B1. Moody’s maintained a positive outlook and said the short-term ratings have been affirmed, at Not Prime (NP) and (P)NP.
Commenting on the rating action, Government Spokesman Nicos Christodoulides told Cyprus News Agency that the upgrade of Cyprus by Moody`s, “is another step in restoring confidence in our economy and another confirmation that we are now on a path that creates a positive outlook.”
The government, he pointed out, will continue with the same serious policy.
The fact that Moody’s maintained the prospects of the Cypriot economy on a positive outlook means that it will probably proceed with a new credit rating upgrade in the next assessment of Cyprus in November. Cyprus is now three upgrades away from the investment grade of Moody’s.
According to the rating agency, the key drivers for the rating action are improvements in economic resilience that have occurred over the past two years and that seem likely to continue in the medium term, as well as the consistent fiscal outperformance and continuing favourable fiscal outlook for Cyprus.
The decision to maintain a positive outlook on the rating of Cyprus reflects Moody`s view that improvements in economic resilience and continuing fiscal outperformance are likely to be sustained, with a reduction in the debt-to-GDP ratio as well as a fall in the stock of non-performing loans held by the banks.
The long-term country ceilings for foreign-currency and local-currency bonds have been raised to A3 from Baa1, to reflect continuing improvements in economic resilience and fiscal outperformance, and the long-term ceiling for foreign-currency and local-currency deposits has been raised to A3 from Baa1.
Moody`s maintains a six-notch gap between the government bond rating and the bond and deposit ceilings. The short-term foreign-currency bond and bank deposit ceilings remain unchanged at P-2.