The three international credit rating agencies Standard & Poor’s, Moody’s and Fitch, along with Canadian ratings agency DBRS will examine the outlook of the economy.
According to the press, Standard & Poor’s will publish its rating on March 17, while Moody’s will follow on March 24. Then comes Fitch on April 21, and then DBRS on June 21.
The cycle of ratings for the winter period of 2016 had positive messages, with ratings agencies giving a positive outlook to the Cyprus economy.
However, as proven by the ratings of Moody’s and DBRS, it is a long road until the Cyprus economy regains trust and reliability. Both Moody’s and DBRS kept their Cyprus ratings unchanged, only changing the outlook from stable to positive.
On the other hand, Standard & Poor’s, and Fitch, had upgraded Cyprus by one grade in Autumn 2016. The S&P upgrade leaves Cyprus just two grades away from the investment grade, with the Ministry of Finance hoping that it will be upgraded in the credit rating agency’s first review of 2017. Fitch rates Cyprus as being three grades below investment grade, Moody’s four grades, and DBRS five grades.
Cyprus needs the upgrades of the ratings agencies to bring down borrowing costs as the government plans to exit into the markets in 2017. In addition, for Cyprus to join the quantitative easing programme of the European Central Bank, it needs to reach investment grade in at least one of the four rating agencies.
The analyses of the four credit rating agencies on the long-term credit ability of Cyprus stress the large improvement that has been made in fiscal management, expecting that Cyprus will maintain primary surpluses above 2% in the coming years.
They also stress the large improvement of macroeconomic conditions, expecting growth rates above 2.5% in the coming years. In addition they mention the improvement in the balance sheets of banks due to the decrease in non-performing loans.