Cyprus debt cut from LCH.Clearnet repo service

Debt issued by Cyprus will no longer be eligible for use with clearing house LCH.Clearnet's repo service following Moody's move to cut Cyprus' credit rating cut earlier on Wednesday, the company said.
LCH.Clearnet, in a statement on its website, said the criteria for each of its 'baskets' of eligible bonds remained fixed, and that until the downgrade by Moody's, Cypriot bonds had been eligible for the single-A general collateral basket.
"Following Moody's lowering of its sovereign credit ratings on Cyprus to BBB+ … Cypriot government bonds will no longer be eligible for delivery in any of the RepoClear euro GC baskets," the statement said.
Repo clearing services are commonly used to raise mostly short-term funding against government bonds with the clearing house reducing the counterparty risks, resulting in lower borrowing costs.
Moody's cut Cyprus' rating by two notches and warned another downgrade was possible, highlighting an energy crisis and exposure to Greece that threaten to tip the island into fiscal meltdown.