Moody's downgrades Cyprus to Caa3, warns may cut more
Moody's Investors Service has slashed Cyprus's rating three notches on an expected rise in the Mediterranean country's debt burden and warned it could cut the rating again.
Moody's cut Cyprus to Caa3 with a negative outlook from B3, saying in a statement the country's debt burden was set to rise because of capital needs for banks hurt by exposure to crisis-wracked Greece.
"We think that there's a higher likelihood that the government may default outright or press for a distressed exchange," said Sarah Carlson, a senior credit officer with Moody's sovereign risk group.
That probability is now about 50 percent, she said, although it is not Moody's base case scenario for 2013.
"We had never published a probability before, I think because right now we're in the part of the ratings space where probabilities become quite high," Carlson added.
Last June, the island became the fourth euro zone state to apply for a financial rescue from the European Union and the International Monetary Fund after its banks suffered huge losses on the EU-approved writedown on Greece's debt.
The bailout could reach 17 billion euros, virtually equivalent to Cyprus' entire economic output.
But a bailout for the country is unlikely to come swiftly, complicated as it is by worries about debt sustainability.
Nor is Cyprus likely to see an improved sovereign rating as long as its debt burden remains outsized, Carlson said.
Even after a bailout deal is finalized, the "sheer size" of the support needed for banks will mean the government's budget challenge "is unlikely to change materially," she said.
Standard & Poor's rates the country CCC-plus with a negative outlook. Fitch rates Cyprus BB-minus, also with a negative outlook.
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Richard Caruana
Jan 11th, 15:31
Where is Joseph?
And all the lejber elves?
joseph borg st john
Jan 11th, 14:22
Hekk ha igiba lil Malta jekk jigi elett JM!!
ALEX GRECH
Jan 11th, 13:17
People got sold out. Banks got bailed out.
Joseph Mifsud
Jan 11th, 12:18
what the PN seems to forget is that Cyprus banks collapsed because of the Greek debt written off and Cyprus government has to bail them.
Another reason is that the main power station was severly damaged and Cyprus government had to fork money to fix.
I am pretty sure that if such thinks happened in malta for sure we will be worse than Cyprus
C Sant
Jan 11th, 13:48
"main power station was severly damaged and Cyprus government had to fork money to fix." - and someone is proposing to throw away good EU money (pipeline) for tankers, gas terminals, massive gas tanks and a power station that we do not need!
A new Cyprus in the making - looking for a one way ticket to Tristan da Cunha!
C. Bartoli
Jan 11th, 15:07
it is all because the Cypriot government was not wise enough and he only depended on one source. In economy one has to depend on various suppliers.
keith perry
Jan 11th, 18:14
Joseph Mifsud: Well not quite,The Cyprus government agreed to the Greek haircut! The governent has also written off idividuals(friends) debt but certainly not put their hands in their deep pockets for the banks!
And sooo wrong about who is paying for the idiots idea to store his friend assads munitions outside by the power station and refused assistance - the PEOPLE are paynig with BIG bills!
keith perry
Jan 11th, 09:50
This however is a brilliant initiative from Malta showing Cyprus how things can be done to heal scars...
It is to be applauded and the organisers given a big pat on the back!
Bravo Malta!
http://famagusta-gazette.com/racing-for-peace-cyprus-and-malta-p17747-69.htm
C Muscat
Jan 11th, 12:00
Good remark.
When I have been in Cyprus; although my friends tried to hide the rift between those coming from different sides; I could easily sense the division.
Also Nicosia could be seen how different both sides; my hotel was exactly at the edge of the best part and when I walkedd to my right we have a lot to envy; while on the other side it was so shameful. So do not put Cyprus in one bag.
C. Bartoli
Jan 11th, 12:43
In 1974 turkey invaded Cyprus and conquered the northern part and no southern cypriot could enter the northern part of Cyprus. The same that happened before 1987 when most maltese people could not enter Zejtun
C Muscat
Jan 11th, 15:35
C Bartoli x ghandu x jaqsam li qed tghid.; kull ma kienu erba thugs li iwaqghu ghal provokazzjoni. Jekk ghandek zmien daqsi taf li ilPN ta EFA ried il-gvern at all costs anke jekk ...
Marco Farrugia
Jan 11th, 08:53
wasnt it Joseph Muscat who suggested we follow Cyprus's model? ha ha
Charles W. Sammut
Jan 11th, 10:48
Wasn't it GonziPN who suggested we follow Ireland's model? ha ha
Andre Grech
Jan 11th, 12:04
Charles as far as I know Gonzi followed the Malta model which resulted into success. Gonzi never copied the Irish model. He always told people to see how Ireland changed since joining the EU. Joseph Muscat wanted us to stay out of the EU and then the euro. Then he tried to ridicule the PM by saying that Cyprus has a better strategy than Malta. Your argument is stupid and makes to sense.
joseph borg st john
Jan 11th, 14:17
Sammut tista igibu skuzi kemm tridu imma kiku smajna minn IL wonderboy Muscat bhallom kien jigrna imma f wiccu baqa issa meta jikun hemm hu ma jimporta xejn immoru ghal bailout.
C Muscat
Jan 11th, 08:39
Grazzio ghal perit mintoff Malta ma hix maqsuma bhal cipru kif riedu jaghmlu fil-1987. Ghax ma tghidx fejn marru 5000 miljun euro u id-dhul mill-bejgh tad-deheb tal-familja li bieghu gcveernijiet PN; Missek tisthi titkellem fuq ekonomija u finanzi meta PN faqqru pajjiz u gabna mimlija dejn.
Alex Ellul
Jan 11th, 12:16
id-deheb li kellna Malta haduh ic-Cinizi bi hlas ac-China dock. Il kuntratt sar fi zmien mintoff u hlas sar wara. Il-kuntratt bejn Mintoff u c-Cinizi sar bid deheb mhux bid dollar. Allura il gvern tal PN gie mwikki bill hlas tac China Dock u tlifna hafna deheb.
Mary Pace
Jan 11th, 13:23
@Alex
If I am not mistaken China dock was done for free in the Mintoff era to consolidate our could relations with the Chinese.
C Muscat
Jan 11th, 16:20
Allex Ellul trid iddahak; ha nghidlek x inhuma d-deheb tal-familja li biegh il-PN; Mid Med bank, kwart minn malta eg pender, tigne etc etc air malta hotels etc; BOV 75%; posta; lottu; telefon; dockyard; sea malta; appartamenti tal-gvern; etc etc ghax ma nafhomx kollha u tinsiex li halla 5 billion euro dejn.
daniel farrugia
Jan 11th, 08:35
"Moody's cut Cyprus to Caa3 with a negative outlook from B3, saying in a statement the country's debt burden was set to rise because of capital needs for banks hurt by exposure to crisis-wracked Greece."
I think this responds your query .....
Francis Saliba M.D.
Jan 11th, 08:16
Does anyone still want Malta to follow in the footsteps oy Cyprus? That is a relevant question because the Labour Party is till critical of the different choice made by the Nationalist Party and that earned for our country the unconditional praise of the Chancellor of a Germany that is the driving motor of the present EU economy.
Robert Agius
Jan 11th, 09:08
Funny, people seem to have forgotten Switzerland which, despite financial crisis, is still at the top of the game. Then there are those how like to point fingers at failing countries such as Portugal, Spain, Greece and Italy to claim how better off rather than damning their corrupt leaders. Pretty much stating - 'hey guys! we ain't as bad as that lot'
Abe Sammut
Jan 11th, 09:18
Insejt meta gonzi fil budget kien isemmi il irlanda bhala tigra ta l-ewropa? Imma gonzi dik biss semma bilhaq allura taghmlu bhal pappagalli
keith perry
Jan 11th, 09:42
Francis Saliba M.D: Knowing Cyprus very well I doubt Malta could follow in the footsteps of Cyprus even if it wanted to!
you would need to : have corruption from top to bottom as a national pastime.
have a dictatorial leader who follows the old communist dogma.
Pass laws that exempted lawmakers and politicians.
And blow up your own powerstation by storing munitions in the open for 2 yrs!!!!!
Mark. Galea
Jan 11th, 10:55
@keith perry
we are on our way to become a new cyprus should PL win next elections
Joseph Aquilina
Jan 11th, 11:16
@keith perry
So in other words you are saying that Joseph Muscat was wrong when he told us to follow on the steps of Cyprus!
Francis Saliba M.D.
Jan 11th, 14:16
@KeithPerry
Local conditions during the Mintoff-KMB days did not differ much from the Cyprus conditions described by you. Those "glory days" are still remembered with nostalgia by surviving Labourites and their successors who hanker for the return of those days with drooling anticipation.
Francis Saliba M.D.
Jan 11th, 14:28
@RobertAgius.
It will be time to return to the Switzerland in the Med. socialist utopia when Malta would be able to devote a similar high proportion of its GDP for the maintenance of an air force and an army consisting of practically the whole male adult proportion in constant alert for rapid mobilisation, over and above the natural protection due to its mountainous terrain.
keith perry
Jan 11th, 18:24
Francis Saliba M.D.Im not talking about some long gone history of "glory days" Im referring to the last four years in Cyprus only!
I have only scratched the surface of what has gone on in that once well off country under the ruling of the communist inspired party that has used the ordinary people of Cyprus as its personal piggybank
more like the last days of Rome.. ask any Cypriot.
Francis Saliba M.D.
Jan 12th, 10:25
@ keith perry.
Like you, I am not referring to any long-gone history of Cyprus but to that country's dire plight here and now and Muscat's recent recommendation that we should have followed that example.
My concern is with Malta not Cyprus.
Karl Abela
Jan 11th, 07:49
Is this where JM was going to lead us too?
Please choose the reason of your report below: