Cyprus gets rating boost from Fitch
Fitch Ratings as upgraded Cyprus’ long-term foreign currency issuer default rating from BBB to BBB+ with a positive outlook.
The upgrade reflects Cyprus’ reduced vulnerabilities to financial shocks, resilience to external shocks and favorable medium-term fiscal trends. Fitch praised the country’s strong commitment to fiscal prudence, which is expected to continue improving its credit metrics.
Fitch highlighted reduced risks in the banking sector thanks to improved asset quality, rising profitability, and strong liquidity and capital buffers. The nonperforming loan ratio dropped to 7.9% at the end of 2023, the lowest since the global financial crisis.
The agency also noted Cyprus’ significant deleveraging over the past decade, with household and corporate debt-to-GDP ratios falling significantly. Strong fiscal performance and a stable economic outlook are expected to further improve asset quality.
Public debt is projected to decline to 70.6% of GDP in 2024 and 65.1% in 2025, supported by high nominal growth and large fiscal surpluses. The cost of servicing the debt remains well contained, with interest costs as a percentage of revenues seen around 3.5%.
