S&P Has Upgraded Credit Rating of Bank of Cyprus to Level “B”
On October 23, the international rating agency Standard & Poor's revised the credit rating of the Bank of Cyprus, having upgraded it to “B” and changed the forecast from “stable” to “positive”. In addition, S&P announced it expected the further increase of the bank credit rating in the next 12 months, subject to continued consolidation of public finances and economic recovery at the same pace. The forecasts of the agency for the period from 2017 to 2020 are very optimistic: it is expected that GDP of Cyprus will be increased by 3% per year.
Commenting on the upgrade, S&P noted that the previous estimation was due to a number of problems that the Bank of Cyprus faced and they mainly related to the need to “reduce non-performing loans and return to sustainable profitability”, as well as low asset quality.
Officially, Cyprus is still in the “junk” category, that is, it does not correspond the investment level, being a step lower according to S&P assessment and three steps lower according to Moody's and Fitch (“Caa1” and “B-“ respectively).