Moody's upgrades Cyprus government bond outlook

Moody's Investors Service has changed the outlook on Cyprus' Caa3 government bond rating to positive from negative, a statement made available in Nicosia on Saturday said. The statement cited as reasons for its change of outlook the stronger-than-expected fiscal and economic performances of Cyprus in 2013 and the Cypriot authorities' track record of meeting conditions under the Troika funding program. "This increases confidence that it will continue to benefit from this support", the statement said. Cyprus received a 10-billion euro(14-billion-U.S. dollar) bailout assistance from the Eurogroup and International Monetary Fund a year ago, which involved the resolution of its banking system with the first-ever bank bail-in -- the use of depositors' money to recapitalize banks. This model of recapitalization was adopted as official European Union policy at a two-day EU summit meeting which ended on Friday. Moody's said it affirmed Cyprus' Caa3 bond rating because "of the persistent risks that remain to Cyprus' public finances and their sustainability over the medium term as a result of significant uncertainties to the prospects for the macro-economy and banking sector. However, Moody's said it has raised the local and foreign-currency bond ceilings of Cyprus to Caa1 from Caa2, reflecting a lower likelihood of exit from the euro area as the country achieves its targets under the Troika program.