Moody?s Investors Service downgraded Cyprus?s bond rating to B3 from Ba3 and assigned a negative outlook.
?The profound difficulties in the Cypriot banking sector, which are the result of deteriorating conditions in Greece and Cyprus, are the key driver? for the decision, Moody?s said in a statement today.
To maintain ?appropriate? domestic bank-capital levels, the Cypriot government will probably have to give the banks financial support ?that could threaten the sustainability of the government?s debt burden,? Moody?s said in the statement.