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And The Hits Just Keep On Coming: Fitch Downgrades Cyprus To BBB, Outlook Negative
Do they mean Cyprus... or France?
FITCH DOWNGRADES CYPRUS TO 'BBB'; OUTLOOK NEGATIVE
Fitch Ratings-London-10 August 2011: Fitch Ratings has downgraded the Republic of Cyprus's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'BBB' from 'A-'. The Outlook on the Long-term IDRs is Negative. Fitch has simultaneously downgraded the Short-term foreign currency IDR to 'F3' from 'F1'.
The Country Ceiling has been affirmed at 'AAA', the ceiling appropriate for euro area members.
"The two-notch downgrade of Cyprus's ratings to 'BBB' reflects the actual and anticipated fiscal slippage, compounded by Fitch's expectation that the sovereign will be unable to access the international debt markets in order to refinance an increasing debt maturity profile in H211 and H112. The 2011 deficit is now expected to be close to 7% of GDP and not all of the increase, from 4%, since the agency's most recent analysis in June can be attributed to the naval base explosion, which took out half of Cyprus's electricity generating capacity," says Chris Pryce, Director in Fitch's Sovereign Group.
The government's calculations indicate its financing requirements in the last five months of the year will be close to EUR1.1bn, of which EUR650m will be existing debt falling due for redemption. Against this, the government has EUR570m of cash balances, representing about half of the total financing requirement. The government anticipates that it will be able to refinance the balance by borrowing from domestic financial institutions, although Fitch considers that this may prove challenging at a time when the banks are facing a decline in asset quality. Even if the sovereign can secure refinancing through H211, it will enter 2012 with minimal cash balances and refinancing needs of EUR1.2bn in the first two months. Under current market conditions (government three-year yields reached 15.4% in August), Fitch believes that the government will be unable to meet this target without recourse to external official assistance, reflecting a lack of options inconsistent with a sovereign issuer in the 'A-' category. At this juncture, Fitch anticipates that such assistance is likely to be forthcoming.
On 11 August, the new government intends to put before parliament an austerity package to be implemented mainly in 2012. Fitch understands that the package is designed to restrain public sector wage costs and employee numbers, cut welfare costs by better targeting of recipients and raise taxes. If agreed by parliament and successfully implemented, it would cut the prospective 2012 general government deficit by about 3.5pp to 2.5%, effectively restoring the expected fiscal position reported in the 2011 Stability Plan. Fitch understands that the package has been endorsed by the leaders of all the main parties and agreed with the Social Partners. While Fitch anticipates that the austerity package will be approved by parliament, the agency remains concerned about the execution risks of implementation, particularly given the inability of previous administrations to address fiscal consolidation and structural reform measures.
Fitch's downgrade of Cyprus's rating by three notches at the end of May reflected the severity of the crisis in neighbouring Greece and the risk this poses for the Cypriot banking system and consequently possible calls for support from Cyprus's public finances. Cypriot banking sector exposure to Greece is significant. Approximately one-quarter of the banking system's assets are now booked as Greek exposure, including almost EUR8bn of Greek sovereign bonds, following the recent repatriation by the Greek parent bank of EUR5.2bn and an estimated EUR5bn (partly secured) of Greek bank bonds. In addition, through their substantial networks in Greece, Cypriot-owned banks have lent significant amounts to Greek companies and households. The worsening fiscal position has led Fitch to revise its previous view that the sovereign would be able to recapitalise the banking system at the assumed level (25% of GDP) without significant external support, given the increased strains on its own funding situation.
The loss of generating capacity from the power station will have a significant impact on growth this year and next. Fitch's forecasts for GDP growth have been revised down by 1.5pp in both 2011 and 2012, although the potential for further slippage cannot be discounted. On the upside, most of the capacity shortfall could be eliminated by the autumn, leading to the possibility of stronger growth in 2012. On the downside, the hike in energy tariffs, the higher cost of the replacement energy supply, the additional austerity and negative confidence effects from the weakening sovereign credit profile could have a further negative impact.
Triggers for further negative rating action would include further fiscal slippage or revisions to key deficit or debt metrics, an inability or unwillingness to implement the austerity package leading to a failure to establish firm fiscal consolidation, a failure to secure sufficient and timely external financial support if needed, weaker macro-economic performance, or a further deterioration in the banking sector outlook, including capital flight via bank deposit outflows
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Like the Teletubies would say: OH OH!!
which US bank has the most exposure to cypress. I'm in the mood to pound the bid.
End of the world Bitchez!
get your BOB's ready and your AR's loaded!
Oh Hell yeah... double taps galore coming to a street near you soon... Bring on the socialist-zombie-hooligans!!
Mining shares fully decoupled and now moving north... Winning!!
Well, Greece is mostly affected to Cypriotic banks and they'll crash because of it and that means Germany will go into sewer territory soon and that will pull the rest of Europe down and that will trash every American bank.
Europe is still in full melt down,,,, with depositors steadily pulling funds from the banks.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=...[s231245065]&disp=P
Here's my speculation. Humongous Bank and Broker has figured out that:
- The Europe debt bubble is collapsing now - ahead of the US.
- That most of Asia is incapable of survival without massive natural resource imports (including food) which they are paying for via an export business to the developed world.
- The economies of the developed world are going to shrink with fiscal austerity.
- One of the few countries with a population/resource balance (ie, it can more or less sustain itself without global trade) is the US.
- The largest military in the history of the world is the US.
Hence, when the dust (literally) settles the US is going to be basically OK while the Rest-of-World is going to be a bit of a (shall we say) 'disorganized' mess.
This is the only scenario that (to me) explains the re-election of the president and action in the credit/PM markets.
Economic DEFCON 2 eminent any day now.
Pay attention to
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=...[s240729620]&disp=P
Europe has had its shares of revolutions, turmoil, war, widespread misery but also RECOVERY.
In that sense, I dare you to think that America will be able to recover sooner if at all.
Europe will NOT disband. Europe will emerge stronger and more coordinated. The sentiment that created the EU for 50 years now with open borders between nations that had been at war not too long ago, and finally a common currency is the still the same sentiment that will see Europe through this as well.
America can't even open a border to Canada which it fought with side by side in WW2! Americans and Canadians share an international border for fucks sake. You have to travel alot in Europe to find an international border anymore.
The US needs to loose its reserve currency status and the Fed needs to be blown up. Plain and simple.
Interesting.
The common thought pattern is that Germany will pull out and leave the rest in some pretty deep shit. Its just a matter of how much shit Germany is willing to eat before it happens, but it WILL happen.
I'll need to think about your comment... Are you in Europe? Is this a 'my dad can beat up your dad' thing?
What's cypress GDP like 22 bil?
Meh.
Yes, and their banks carry like 140 billion in debt or so :)
Can you see the problem now?
Please don't blow up so fast, i haven't even seen your Euro coins yet.
Here you go:
http://images.publicradio.org/content/2010/12/24/20101224_euro_piigs_18.jpg
That reminds me SD by now we need a fitting acronym for the broken Euro core.
BENEFRA-G ? G for Germany last not least.
Benefucked.
And for my American friends :
http://maps.google.com/maps?q=cyprus&hl=nl&ll=35.128894,33.431396&spn=7.078118,16.864014&safe=active&z=7
Who cares about Cyprus?
It would make a nice Med naval base for the Russians. Deal: 100 years or the end of the world, whatever comes first.
Turkey might have something to say about that. half the island is theirs and they already have bases there.
"ATHENS - It has been more than 50 years since the sophisticated surveillance equipment sitting atop Mount Troodos - the highest point on Cyprus - began scouring the airwaves across the Middle East, the Caucasus and Central Asia. Tirelessly, the huge dishes and antennas of the secret base have scanned electronic and radio signals, intercepting commercial, diplomatic and military communications wherever the West maintains interests.
"In some American facilities in Nicosia - such as the yard of the United States Embassy in Lefkosia and what you might call the agricultural center on the hill - you see some very weird antennas," said an Athens-based strategic analyst speaking to Asia Times Online on condition of anonymity. "They are used for tactical intelligence, monitoring Arab radio broadcasts and then transcribing and translating them for policymakers in Washington." - ATimes 2004
Really? Cyprus? Who gives a care. France AAA has been confirmed.
Tell us when the munis and states start sliding into the abyss.
Right about... NOW!
The Russian mob, that's who. Their assets just took a major hit. Any guesses what happens next?
Could be a double whammo for Israel together with the USA downgrade...
Apparently the ratings agencies have declared War on sovereign nations and other units of government all the way down to the smallest muni's.
When are they going to downgrade the transnational corporates who depend on those nations for their survival . . . on top of Mark to Myth (which include those very same government debts)?
It's all just Greece writ large, imo. Good luck with that global austerity campaign, bitches. This will lead to more than haircuts . . .
http://michael-hudson.com/2011/06/how-financial-oligarchy-replaces-democ...
They didn't upgrade USA to AAAAA at the same time. How unjust. /sarc off
The US will be the last one standing. First the EU goes down, then China - buy American: http://garereport.blogspot.com/?spref=fb
I am The Chief
everyone at the rating agencies are now working overtime and getting paid time-and-a-half. ah, these are their halcyon days that they can tell their grandchildren about.
by the way, who DOES pay the rating agencies? hmmm...
Soon rating agencies will have nobody left to downgrade but each other, just like when every country melts down
Hits.....how fitting....Cyprus Hill hits from da...
http://www.golyr.de/artist_imgs/artists/3221/3221_image_18.jpg
http://maps.google.com/maps/place?ftid=0x80dd2e92596bf6ef:0xd42cd7add5c1...
http://www.youtube.com/watch?v=W4VpE-0zitU
"So you wanna be a rock superstar....and live large, a big house...five cars..."
HAPPY FOURTH OF JULY!!! HAPPY INDEPENDENCE DAY!!!! GOLD AT 1776!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Dang! Shits happening so fast I only have time to read the headlines!
Person getting the last cash out of the bank please burn it down.
How long can it before corporations start creating their own armies?
Or their own asset backed currencies? If Apple issued notes against ipads (and warehoused a large percentage of future generation ipads), every other currency in the world would crumble.
Ratings agencies are a whole lot cheaper. And, c'mon, who do you think national armies fight for? Doh!
Economic hit men: http://www.youtube.com/watch?v=n7Fzm1hEiDQ&feature=player_embedded
Gold at 1776. Revolution, bitchez!
how much debt does China hold in the EU--anyone ??
I would invite Sudden to America but....we are next in the carnage. Besides, I bet he has a nice apt. in Europe.
And, maybe Tyler can lead us in a song. That always helps.
I said real troubles would start in Cyprus (!) Victory lap.
Be careful with those victory laps CE, last time I did one, I fell off my bar stool.
Of all the places to get hit - Cypress? This is no coincidence. The Brits and Israeli's really use Cypress when operating in the Med. Just more pressure to cordon Syria and Libya and get higher prices for all that new infrastructure. Maybe its an exchange - trade hurting Cypress for Turkiye humanitarian incursion into Syria.
September is going to be a busy month.
Also in the hits keep coming category...
http://ca.news.yahoo.com/hk-exchange-trading-disrupted-hackers-target-website-112104764.html
Creditanstalt --> Cypustalt
off topic but gold @ +1776! Patriotic price level
Gold Revolution, Bitchez!!!
Not for long...the milestones will keep on coming
Of note, a big milestone: Gold crossed platinum for the first time this week
I swear, listening to the anal cysts on FBN and Blowhorn I have been led to believe that these idiots would say we are in a buying oppertunity even if there were 20 ICBMs in the atmosphere headed our way.
When does the RUT crash through the 3yr 200 day? The fucker won't go under 670
Some body buy some rtsa, i want my 20.
Those who ignore Cyprus wil be in for a surpirse
Turkey next
hey! oBLAHma! now would be a perfect time for a distraction! like, a war or something!
Holy Hell, Dagen and Connell had a guest on (David something or another, I got distracted by my girlfriend and missed his name) who actually told the truth about Europe!
Turkey is going to invade Cyprus again by the end of the year.
Erdogan has explicitly stated that is his intentions and one of the reasons behind the Turkish military purges.
Shiate's gonna get real once the Turkish Cypriots declare a new state come November/December.
Yes Turkey will invade Cyprus by year's end, right before Israel invades Iran and France invades Belgium.
As for Cyprus' downgrade, we had it coming, our economy was not nearly as bad a month ago before our imbecile politicians blew up our main energy infrastructure and until the current government changes, things will only get worse.
In other news, they have found the motherload of Mediterranean oil/natural gas reserves in Cyprus which is already agreed that will be drilled by Noble Energy therefore giving Israel a great percentage and Cyprus will get a free ride, hence Erdogan's touting his horn saying that Turkey has rights in the stake through Northern Cyprus, which they do not according to international law since they are considered to be a seperate state.
You are not paying attention, July 19th Erdogan went full throttle into demanding a two state solution by year end, in conjunction with the new round of military purges the same week.
http://www.todayszaman.com/news-251045-turkey-not-interlocutor-of-greek-...
http://www.upi.com/Top_News/World-News/2011/07/19/Erdogan-advocates-2-st...
http://www.hri.org/news/cyprus/tcpr/2011/11-07-21.tcpr.html
Erdogan’s gung-ho behaviour and tough rhetoric does little towards warranting Turkey’s European Union accession more and more unlike to materialize.
Nicolas Sarkozy and Angela Merkel’s condemnation paired with German Politicians and British members of the European Parliament calls for EU-Turkey’s negotiations to be cut off after Erdogan’s threats of freezing EU-Turkeys relations once Cyprus assumes its presidency in July 2012, indicate how this situation will lead to further turmoil.
Despite Ankara’s hardball though, Turkey will not stop trading with the EU, its largest trading partner, despite EU’s long-standing decision about the rotating presidency of its council, I’m therefore assuming that if Turkey’s economic growth hits a plateau in the forthcoming future on par with the US and Eurozone’s underperformance, both Erdogan and Eroglu will be forced to adopt a more humbling stance.
Instead of progressing from the failed 2004 Annan Plan, Turkey stance assumed a backwards trajectory equal only with the absurd nationalism of the Greek Cypriot Church, because of Erdogan’s pride, thereby forcing Turkey to choose between the EU or Cyprus.
The truth of the matter is that European Union frequently engages in strong warnings regarding Turkey’s behaviour, however considering that most is nothing more than hollow rhetoric, I very much doubt that any measure will be taken. It doesn’t change the fact though that Cyprus is a permanent member of the Security Council of the United Nations and whatever Erdogan’s future actions are, like attacking a member state of the European Union, there will be repercussions.
That been said, Turkey has become a veritable regional economic and political powerhouse and Erdogan’s neo-Ottoman aspirations are causing further rift between them and the EU, whose increasingly objecting Turkeys membership, due to its constant and flagrant violation of UN, Security Council and International Law by illegally occupying 37% of Cyprus – Without even taking into consideration problems with Kurds & Armenians. The problem is that threats from the EU will eventually carry less and less weight and it might drive Turkey to seek International recognition for its Turkish-occupied state as an independent state.
What makes things even more complicated is that Cyprus will soon be drilling for its natural resources and Turkey illegally claims its stake from future proceeds, which is preposterous since Turkey has not yet signed any convention on the Law of the Sea and Cyprus as a legitimate EU member state, has every right to drill anywhere within its territorial ground and sea waters.
The reason which makes me question any military invasion from Turkey, does not only include all of the above, of which the construction of an oil pipeline from Cyprus to Europe is the most crucial of all, warranting EU forces intervention along with Greece and Russia’s help, but also the fact that like Cyprus, Turkey is also positioned right in the middle of an unstable geopolitical area, bordering with Israel, Iran, Syria and Russia. Between Syria’s causing of increasing strategic discomfort with their support from Iran and its threat to Israel, Russia’s concern for Turkey’s naval posturing with increasing armament across its maritime path outside the Black Sea, along with both Turkey’s and Russia’s disapproval of an episode between Israel and Iran and poaching Syria as a client for themselves separately, make for an interesting future situation.
What’s worth noting is that the great Samuel P. Huntington predicted Turkey’s westernization and secularism increasing decline and its ascendance as a centre of Muslim Civilization due to fulfilment of the necessary requirements vis-à-vis strong economic core and even stronger military power.
I too started becoming more and more pessimistic regarding Cyprus’ geopolitical situation and seeing that a collapse between Turkey and the EU will only drive Turkey closer to its natural culture powered by Islam’s strong influence, decided to decrease any exposure in Cyprus move to London where I’ve been living for 5 years since I quit University. My immediate family looks at me perplexed when I casually share my opinions but once my brother finishes his military service in a year I’m taking him with me.
I love these austerity plans the governments come up with. T-minus 3 months until revenues will "unexpectedly" come up short and expenditures will "unexpectedly" come up higher than the plan.
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