Fitch downgraded Cyprus' credit rating to junk. The assessment of the country's government bonds passes from BBB- to BB+, the vote reserved for the infamous junk bonds. A party for speculation. The downgrade, which follows the one that has already arrived by Moody's, reflects “a concrete increase in the capital needs that Cyprus banks are expected to need due to their exposure to major Greek institutions,” Fitch said in a statement.
But that's not enough. The rating outlook for Cyprus remains negative: further downgrades could therefore occur in the future. In recent days, several press leaks had defined the possibility that "highly probable". Cyprus is forced to ask for financial aid from the European Union.
Last week the Cypriot finance minister, Vassos Shiarly, had admitted the urgency of an international aid plan to recapitalize the banks. The latest estimates on the funds needed by the banking sector speak of a commitment higher than the initial forecasts, which in turn indicated a figure between 5 and 10% of GDP. According to some sources, the aid package for Cyprus would be around 3-4 billion euros.
Amadeu Altafaj, spokesman for the Vice-President of the European Commission Olli Rehn, however, had made it known that "no requests for aid have arrived from Cyprus, nor are there any indications that it is arriving", even if the country is experiencing imbalances and the situation is "very complex".
