Cyprus credit rating cut by Fitch

City A.M. Reporter
Cyprus has had its credit rating cut by rating agency Fitch because of the knock-on effect of the Greek debt crisis.

Fitch cut Cyprus's rating to A- from AA- on concerns that its banks may face losses on the money they lent to Greece.

The new rating is not expected to stop Cyprus borrowing money, but it may make it more expensive to do so in future.

The move comes as the eurozone continues to negotiate a new bail-out package for Greece to avoid it defaulting on its debts.

Much of the money Greece owes was from banks in Cyprus as well as other European lenders.

The downgrade is the result of concerns that this money will now not be paid back in full, even if there is a further bail-out.

About one-third of the assets of banks based in Cyprus, including those of Greek subsidiaries on the island, are linked to Greece, according to Fitch.

"The downgrade reflects the severity of the crisis in neighbouring Greece and the risk this poses for the Cypriot banking system and consequently the public finances of Cyprus," said Chris Pryce, director in Fitch's Sovereign Group.