Cyprus says Moody's A3 upgrade vote of confidence in economy

A two-notch upgrade of Cyprus' debt by Moody's is a vote of confidence in the island's economy, the country's president said on Saturday.

Moody's upgraded Cyprus' long-term issuer and senior unsecured ratings to A3 from Baa2, citing a "material improvement" in fiscal and debt metrics that the rating agency expected to be sustained. It was the first time the island has been in the "A" category, considered upper medium grade, since 2011.

"A prudent fiscal policy, stability in the financial sector and the constant reforms at the core of our policies is reaping positive results," President Nikos Christodoulides said in a written statement.

"This success is a collective effort, and primarily that of the Cypriot people," he said.

Cyprus' credit ratings started tumbling in 2011 after a domino sequence of events from fiscal slippage, a massive munitions explosion and ever-increasing bank exposure to the debt crisis in Greece pushed the country into an international bailout in 2013.

In return for financial aid, Cyprus was forced to wind down a major commercial bank and seize a portion of unsecured clients' savings at another in a process known as a bail-in.

Moody's said Cyprus had significantly reduced its government debt ratio since its peak in 2020, ranking among the countries with the largest debt ratio reductions globally.