Cyprus rating cut on the cards, says Fitch

  • Ratings agency Fitch put Cyprus on rating watch negative on Tuesday.

    Fitch currently rates Cyprus B, a speculative rating.

    The announcement comes on the back of a European bailout plan for the island member of the euro zone that has rattled global financial markets this week.

    As part of the deal, Cyprus agreed to fold small deposits of Cyprus Popular Bank, also known as Laiki, into Bank of Cyprus.

    Business at Laiki will be wound down under the terms of a $13 billion rescue package offered by the European Union and the International Monetary Fund.

    "Fitch will seek to resolve the RWN once further key details of the program have been agreed and made public," the rating agency said in a statement.

    Last week, rival rating agency Standard & Poor's cut Cyprus' long-term foreign currency credit rating to CCC from CCC-plus.

    Moody's Investors Service rates Cyprus Caa3.

    Both ratings are classified as ‘junk’ level.