Standard & Poor's Ratings Services has lowered its long-term sovereign credit rating on the Republic of Cyprus to 'B' from 'BB', the ratings agency reported.
S&P has also affirmed its short-term sovereign credit rating on Cyprus at 'B'.
“The long-term rating remains on CreditWatch with negative implications, where it was initially placed on August 1, 2012,” the agency said in a press release on Wednesday.
“The downgrade reflects our view that Cyprus' creditworthiness has deteriorated since the last downgrade on August 2, 2012, as the government has not yet negotiated a support package, while external and fiscal risks have risen,” it said.
According to S&P, electoral considerations prior to the February 2013 presidential polls have contributed to policy inertia at a time when the country faces a banking crisis, in part triggered by the involvement of Cypriot banks in the restructuring of Greece’s debt in early 2012.