Fitch cuts Cyprus rating 3 notches due to Greece

Fitch ratings agency cut Cyprus’ sovereign credit rating on Tuesday from AA- to A- and is warning of another possible downgrade because of its banking sector’s large exposure to Greece.

“The downgrade reflects the severity of the crisis in neighbouring Greece and the risk this poses for the Cypriot banking system and consequently the public finances of Cyprus,» said Chris Pryce, director in Fitch’s Sovereign Group, in a statement.

The agency said around one-third of the banking system’s assets are booked as Greek exposure, including that of Greek bank subsidiaries based on the island.

Despite the downgrade, Fitch said that Cypriot banks remained «relatively well placed» to absorb losses on their Greek debt.

Fitch’s move follows similar downgrades by the ratings agencies Moody’s and Standard and Poor’s in recent months based on similar concerns.