International Rating Agencies

Following the recent positive reviews of the Cyprus economy, the two international rating agencies Standard & Poor’s and Fitch, have upgraded the economy during the last days.

More specifically, Fitch upgraded the Cyprus economy to B+ and the horizon of the economy to positive from stable. According to the Fitch, the upgrade is a consequence of the better than expected performance of the economy during the first half of the year which ended up with a smaller than expected fiscal shortfall. The analysts of the agency believe that the GDP of the country will shrink even more in 2015, whereas they expect to see an increase of the GDP by 2016, one year earlier than their initial estimations.

In conclusion, they believe that the risks of the financial aid program were reduced substantially being though relatively high for the moment.

Standard & Poor’s upgraded the country’s long-term foreign and local currency sovereign debt to B+. At the same time, S&P affirmed the short-term foreign and local currency sovereign debt at B.

The fiscal performance of the country was higher than anticipated and the agency focused on the services industries where the growth shrinked much less than expected. Just like Fitch, S&P anticipate a decrease of the GDP in 2014 and 2015 which in turn will increase in 2016.

The analysts of the agency are positive for additional upgrades of the economy upon the banking industry showing an improvement in the quality of the assets in the banks’ portfolios and after all the capital restrictions are lifted.

Three of four Cyprus banks pass EU-wide stress tests

After putting the euro zone’s top 130 banks through their paces, the European Central Bank announced on Sunday 26th October 2014 the results of its landmark health check. Cyprus’ three of four banks that took the stress test – Bank of Cyprus, Central Co-op and RCB – passed the test. The fourth, Hellenic Bank, has failed it with a capital shortfall of 176 million euros. Its board are meeting to discuss an additional equity issue.