Fitch upgrades Cyprus’ rating

Fitch Ratings announced that Cyprus‘s Long-term foreign currency Issuer Default Rating (“FCIDR”) has been upgraded to ‘AA-‘ (AA minus) from ‘A+’. Fitch also revised Cyprus‘ local currency IDR to ‘AA-‘ from ‘AA’. Fitch has changed the LT IDR Outlook for Cyprus to Stable from Positive, and its Country Ceiling is upgraded to ‘AAA’ from’ AA+’. Additionally, Cyprus’ Short-term FCIDR is upgraded to ‘F1+’ from ‘F1’.

According to Fitch Ratings, the EU Council’s acceptance of Cyprus into the euro area justifies an immediate upgrade in the ratings as euro area membership enhances sovereign external creditworthiness. The extinction of the individual domestic currencies renders transfer and convertibility risk and the risk of balance-of-payments crises negligible. The benefits also include greater price transparency; lower transaction costs; increased investment, trade and capital flows and lower capital costs.