In early February Moody’s agency will issue its first rating for the Cypriot economy, opening the way for a round of rating actions, estimated to mark the return of Cypriot junk-rated bonds back to investment-grade.
Burdened by an ailing oversized banking sector and an economic recession, Cyprus saw its ratings decline to junk in 2012, losing access to financial markets, that forced the government to apply to the EU and the IMF for financial assistance in 2012. The government completed its €10 bailout programme in March 2016 and believes that 2018 will see its ratings return to investment-grade level.
A return to the investment-grade category would compress Cyprus’ bonds yields further down, leading debt servicing costs further lower from the historic low levels in 2017, while it will enable the inclusion of Cypriot bonds to the ECB bond-purchasing programme.
Moody’s will be the first agency to issue a rating action for Cyprus on February 2, followed by S&P on March 16, and Fitch on April 20. DBRS will concluded the first round of rating actions on May 25.
The second round of rating actions is expected to take place on July 27 by Moody’s, September 14 by S&P, October 19 by Fitch and on 23 November by DBRS.