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The ratings firm Standard & Poor's Thursday
downgraded the long-term sovereign credit rating for Cyprus to CCC
from 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."
