Moody's cut Cyprus' sovereign rating by two notches, from Ba1 to Ba3, with a negative outlook. This was announced by the agency in a note, explaining that the decision is linked to the growing risk of Greece leaving the euro, a country with which Cyprus shares strong ties, not only economically.
Moody's also explains that the weak Cypriot credit position – whose rating was at a speculative level even before this downgrade – is further compromised by the limited possibility of access to international markets.
But the cut in the rating is mainly attributable to the news on the funds that the country will have to put on the plate to support its banking sector: the latest estimates speak of a commitment higher than the initial forecasts, which in turn indicated a figure between 5 and 10% of GDP.
Meanwhile Amadeu Altafaj, spokesman for the vice president of the European Commission Olli Rehn, he announced that "there are no requests for aid from Cyprus, nor are there any indications that they are on the way", even if the country is experiencing imbalances and the situation is "very complex".
However, Cypriot Finance Minister Vassos Shiarly admitted on Tuesday the urgency of an aid plan international to recapitalize the banks. SAccording to some sources, the aid package for Cyprus is estimated to be around 3-4 billion euros.
