Moody’s upgrades Cyprus ratings

Moody’s Investors Service 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).

A Moody’s press release said the outlook on the ratings has been changed to positive from review for possible upgrade. Moody’s rating actions followed the European Union’s final decision to allow Cyprus and Malta to adopt the euro on 1 January 2008. These actions conclude the review for upgrade initiated by Moody’s on 17 May 2007.

”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 — Senior Analyst in Moody’s London office.

Today’s positive rating action is further supported by the strengthening economic fundamentals of both Cyprus and Malta, the press release said, adding that ”in recent years, both countries have successfully implemented a programme of fiscal consolidation that has narrowed their fiscal deficits and reversed the previous upward trend in their public debt burdens”.