Fitch downgrades Cyprus's local currency IDR to 'restricted default' from CCC

Fitch Ratings has downgraded Cyprus’s long-term local currency issuer default rating to RD (restricted default” from CCC following confirmation from the Cypriot government that the exchange of a number of domestic law government bonds has been completed.

The downgrade to 'RD' reflects Fitch's opinion that the exchange constitutes a distressed debt exchange (DDE) in line with its criteria and follows the downgrade of Cyprus's LC IDR to 'CCC' from 'B' on 3 June. Fitch has downgraded only the affected domestic bonds to 'D' from 'CCC' and affirmed the rest at 'CCC'. With foreign law bonds unaffected by the exchange, the Long-term foreign currency IDR has been affirmed at 'B-'with a Negative Outlook. The Short-term foreign currency IDR and the Country Ceiling have also been affirmed at 'B'.