ECONOMY

Fitch affirms Cyprus’s long-term foreign and local currency IDRs at B- and CCC

Fitch Ratings on Monday affirmed Cyprus’s long-term foreign currency and local currency Issuer Default Ratings (IDRs) at B- and CCC respectively.

The issue ratings on Cyprus’s senior unsecured foreign law and local law bonds are also affirmed at B- and CCC respectively.

The outlook on the long-term foreign currency IDR is negative.

The affirmation of Cyprus’s ratings reflects the following key rating drivers: An external European Union-International Monetary Fund program supports the sovereign’s near-term liquidity position, although the downside risks are substantial.

The economic outlook remains bleak despite growth so far in 2013 performing better than Fitch’s previous expectations.

The agency currently expects gross domestic product to contract 7 percent this year compared with its previous forecast of nearly 9 percent and after declining 2.4 percent in 2012.

The economy is likely to remain in deep recession in 2014 with the downturn lasting longer than assumed under the EU-IMF program.

[Reuters]