Moody’s announcement not a rating action, FinMin says | Cyprus Mail

Moody’s announcement not a rating action, FinMin says | Cyprus Mail.

Ciprul se scufunda, la ordinele troicii… :(

UPDATE: iata si anuntul Moody’s, care vine dupa ce si celelalte 2 rating agencies anuntasera default-ul:

London, 01 July 2013 – Moody’s Investors Service says that it considers Cyprus (Caa3/negative) to have defaulted, in line with Moody’s default definitions, further to the conclusion of an exchange of EUR1 billion of existing domestic government bonds. The debt exchange is in accordance with Cyprus’s commitments under the program agreed with international partners. On Monday 1 July, the Cypriot authorities announced the completion of the exchange of bonds.

Moody’s understands that, out of the selected bonds, 67% of the total outstanding amounts was subject to the exchange. The exchange involved an extension of existing bonds maturing from 2013 through 2016 with longer maturities and no change in the bond coupon.

According to Moody’s definitions, this exchange represents a ‘distressed exchange’, and therefore a debt default. This is because (i) the exchange amounts to a diminished financial obligation relative to the original obligation, and (ii) the exchange has the effect of allowing Cyprus to avoid payment default in the future.

Moody’s does not use a ‘Default’ or ‘Selective Default’ rating, but rather maintains ratings on securities in default that are indicative of the magnitude of losses to investors.

Moody’s will revisit Cyprus’s rating in due course to assess the impact of the exchange on the sustainability of Cyprus’s debt burden together with other relevant factors, including Cyprus’s likely compliance with measures that are a condition of external support and its growth prospects.

Cyprus’s sovereign rating is Caa3, negative outlook. Moody’s downgraded it to that level from B3 on 10 January 2013. At the time, Moody’s said that the risk of a payment default or distressed exchange was high.

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