NICOSIA, Nov 23 - Moody's has upgraded Cyprus' long-term issuer and senior unsecured ratings to A3 from Baa2, marking a significant vote of confidence in the island's economy. This upgrade is attributed to a "material improvement" in fiscal and debt metrics, which the agency expects to be sustained. This is the first time since 2011 that Cyprus has achieved a rating in the "A" category, considered upper medium grade.
President Nikos Christodoulides commented that the upgrade is a result of prudent fiscal policy, financial sector stability, and ongoing reforms. He emphasized that this success is a collective effort, primarily credited to the Cypriot people.
Cyprus' credit ratings had been declining since 2011 due to various factors, including fiscal mismanagement and a significant bank exposure to the Greek debt crisis, which led to an international bailout in 2013. In exchange for financial aid, Cyprus had to restructure its banking sector, including winding down a major commercial bank and implementing a bail-in that affected unsecured depositors.
Moody's noted that Cyprus has made substantial progress in reducing its government debt ratio since its peak in 2020, positioning it among the countries with the largest debt ratio reductions globally.