The ratings firm Standard & Poor's Thursday
downgraded the long-term sovereign credit rating for Cyprus to CCC
The firm said it believed that the "risks of a sovereign default are rising" due to the risks of "renewed deposit flight," which could exacerbate the country's economic downturn and create the need for capital controls.
Those risks prevailed even if the government adopts a new plan that would be accepted by international lenders yet be difficult to implement.
Standard & Poor's worsened its 2013 forecast for Cyprus to a contraction of 6 per cent. It said its outlook for the new rating was "negative."
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