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Special> Debt Crisis in Europe> Latest News
UPDATED: April 12, 2013
S&P Revises Cyprus Rating to Stable from Negative

Standard and Poor's Ratings Services (S&P) has revised the rating outlook of Cyprus to stable from negative on account of an expected endorsement of a bailout for the eastern Mediterranean island by the Eurogroup in Dublin on April 5 and the receding of a sovereign default.

"The outlook revision reflects our expectation that the Cypriot government will agree to the terms of an up-to 10 billion euros ESM-IMF financial assistance program and that the program's first loan tranche will be disbursed in time for the government to make a June 4 payment due on a Eurobond," Standard & Poor's said in a statement on Wednesday which was available here on Thursday.

The revision was a pleasant reversal in a series of negative ratings which have pushed Cyprus out of international markets and forced it to seek bailout support from the Eurogroup and the International Monetary Fund in June, 2012.

However, the S&P maintained its long and short-term sovereign credit ratings for Cyprus at CCC/C, citing considerable economic risks and problems on the way to implementing an adjustment program for the economy.

"We could consider raising the ratings if the economy were to stabilize sooner and at higher levels than we currently project," the statement added.

The S&P said it expects that Cyprus will remain a member of the Eurozone and also recently-imposed capital controls to remain, in some form, to protect Cyprus' banks from renewed deposit flight.

The ratings agency said it expects Cyprus' current account deficit to widen to more than 10 percent of gross domestic product and the economy to contract by an estimated 20 percent between 2013 and 2016 on account of the downsizing of the banking system, the flight of deposits and weak growth.

(Xinhua News Agency April 11, 2013)

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