Cyprus downgraded further

International credit rating agency Fitch has downgraded Cyprus a couple more notches into junk status amid concerns that the government's support for the country's troubled banks could cost more than previously thought.

The agency cut its rating on Cyprus to B from BB - and warned of more possible downgrades as it predicted that the banks' recapitalisation needs could be as high as 10 billion euros.

That would push the size of the rescue package that Cyprus is trying to finalise with the other 16 European Union countries which use the euro and the International Monetary Fund to more than 17 billion euros (£14.3 billion).

That, Fitch said today, would drive the country's debt load to more than 140% of its annual gross domestic product, 20 percentage points more than the agency previously estimated.


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