S&P downgrades Greek Cyprus’ rating to BB

Nicosia - Agence France-Presse

Ratings agency Standard & Poor’s yesterday lowered Greek Cyprus’s long-term rating to BB, pushing it into negative watch, saying the amount of global aid sought by Nicosia was 11 billion euros.

“In our base-case scenario, we expect Greek Cyprus will negotiate a financial support package of 11 billion euros, or just over 60 percent of Greek Cyprus’ GDP,” a statement by the ratings agency said.

European Union member Greek Cyprus in late June requested international assistance from the EU, the European Central Bank and the International Monetary Fund to cope with crisis shaking its banking system and economy.

The amount of aid it asked for has not yet been officially quantified. Standard & Poor’s said it believes Greek Cyprus government debt is expected to rise nearly 12 percent on average in 2012 and 2013, peaking at more than 105 percent of 2013 GDP.

“We believe Greek Cyprus’ short-term financing pressures are increasing as its negotiations with the European Union, ECB, and IMF (troika) are unlikely to conclude before September, and significant uncertainty remains over securing bilateral funds,” it said.

Greek Cyprus has requested a loan of five billion euros from Russia, which has significant interests in the eastern Mediterranean island, but Moscow has yet to formulate its response.