DBRS raised Cyprus' long-term foreign- and local-currency issuer ratings to BB from BB (low), while maintaining a positive trend, citing the country's improved fiscal performance and strong growth and a decline in local banks' nonperforming loans.
Cyprus' government debt-to-GDP ratio fell to 97.5% in 2017 from 106.6% in 2016, supported by early debt repayments, a larger fiscal surplus and strong growth. The positive trend reflects DBRS' view that Cyprus' economic and fiscal performances are likely to be sustained, contributing to an expected decline in the government debt ratio following a rise this year.
The rating agency also confirmed Cyprus' short-term issuer ratings at R-4 and changed the trend to positive from stable.
"However, a period of significantly weak growth, combined with large fiscal imbalances, could lead to a change in the trend back to stable," DBRS said.
The agency expects Cyprus' GDP growth to remain strong after gaining momentum in 2017.
