ECONOMY

Moody’s ups Cyprus, Malta

Moody’s Investors Service yesterday upgraded the long-term foreign and local currency government bond ratings and the long-term country ceilings for foreign currency bank deposits of Cyprus (to A1 from A2) and Malta (to A2 from A3). The outlook on these ratings has been changed to positive from review for possible upgrade. Malta’s short-term country ceiling for foreign currency bank deposits was also upgraded, to P-1 from P-2. Today’s rating changes follow the European Union’s final decision to allow Cyprus and Malta to adopt the euro as of January 1, 2008. «Moody’s views the eventual adoption of the euro by these two countries as a credit positive because it will all but eliminate the risk of a currency crisis and thereby isolate their economies from external financial shocks,» said Tristan Cooper, vice president and senior analyst at Moody’s London office. Yesterday’s positive rating action is further supported by the strengthening economic fundamentals of both Cyprus and Malta, Moody’s said. »In recent years, both countries have successfully implemented a program of fiscal consolidation that has narrowed their fiscal deficits and reversed the previous upward trend in their public debt burdens,» added Cooper. Cyprus and Malta’s long-term country ceilings for foreign currency bonds remain at Aa1 with a positive outlook, while their country ceilings for local currency bonds and bank deposits remain at Aaa. Cyprus’s short-term country ceilings for foreign currency bonds and bank deposits remain at P-1, along with Malta’s short-term country ceiling for foreign currency bonds.