CI Ratings upgrades Cyprus’ Sovereign Rating with Outlook remaining positive

Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, announced that "it has upgraded the Republic of Cyprus' Long-Term Foreign Currency (LT FC) Issuer Rating to 'BB+' from 'BB' and affirmed its Short-Term Foreign Currency (ST FC) Rating at 'B'. The Outlook for the Long-Term ratings remains Positive".

According to CI "The rating upgrade reflects the continued strong performance of the economy, as well as improving public finances and the ongoing recovery of the banking sector. In addition, legislative and structural reforms have helped to increase Cyprus' institutional strength."

In addition, "CI Ratings expects the economy to expand by 3.5% in real terms this year, with the pace gradually moderating to 3% in 2020-21, underpinned by strong projected demand and robust net exports. Downside risks to the outlook remain sizeable, although they appear to be slightly receding as the banking sector is showing solid signs of improvement following the carving out of the non-performing assets of the legacy Cyprus Cooperative Bank (CCB) and the sale of its remaining assets and liabilities to Hellenic Bank. Foreign direct investment is also expected to remain robust in the short to intermediate term in light of initiatives encouraging international private investment in hi-tech, construction, casinos, hotels and marinas, in addition to energy projects linked to the natural gas exploration taking place in Cyprus' exclusive economic zone." 

The Positive Outlook reflects CI’s current expectation that ongoing reforms and robust economic growth will continue to reduce macroeconomic and fiscal vulnerabilities and strengthen the banking sector, minimising the need for sovereign assistance to the banking system in case of an unexpected crisis.

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