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Moody's raise Cyprus ratings by two notches

Staff writer |
Cyprus' creditworthiness has received a boost by Moody's Investors Services after it upgraded its ratings by two notches to B1.

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Moody's cited the faster than expected economic recovery and the outperformance of fiscal targets. The upgrade came as international creditors completed their last review of Cyprus' economic adjustment program.

The two-notch upgrade came as a pleasant surprise to the Cypriot Finance Ministry because Moody's previous rating in November 2014 was B3 on stable outlook.

Cyprus is about to exit a three year economic adjustment program after it was accorded a 10-billion-euro ($10.8 billion) bailout by the Eurogroup and the International Monetary Fund in March 2013. The eastern Mediterranean island was able to issue a bond maturing in 7.5 years worth 1 billion euros at a yield of 4.25 percent.

Moody's affirmed Cyprus' short-term rating to not-prime.

"The first driver of Moody's decision to upgrade Cyprus' rating to B1 is the faster than expected economic recovery, and the expectation that the export sector will continue to demonstrate resilience and will now be augmented by growth in domestic demand," Moody's statement said.