Cyprus likely for a cut rate by Moody’s (Reuters) (13-01-2011)

ATHENS/NICOSIA - Moody's Investors Service warned Cyprus it could cut its Aa3 sovereign credit rating on Thursday, citing the island's deteriorating fiscal standing and banks' high exposure to Greece.

According to Moody’s Cyprus is likely to have its rating cut by more than one notch but it is likely to remain an investment-grade credit. Also, concerns about a worsening in Cyprus's fiscal metrics, deep-rooted structural problems and exposure to Greece among local banks prompted the review.

Responding to the Moody's warning, Cyprus's finance ministry announced that the island had already covered its medium-term financing requirements and need not borrow during "exceptionally difficult" current market conditions.

Cyprus’s debt to gross domestic product (GDP) ratio is forecast at 61.6 percent this year, slightly higher from 61 percent in 2010 while it is trying to cut its budget deficit to 3.8 percent of GDP this year from an expected 5.5 percent in 2010.

Source: Reuters