S&P upgrades Cyprus to B+

Standard & Poor's said it raised its long-term foreign and local currency sovereign credit ratings on the Republic of Cyprus to B+ from B.

At the same time, the agency affirmed the short-term foreign and local currency ratings at B.

The outlook is stable.

S&P said the upgrade reflects its view that Cyprus' economic and budgetary performance has been more positive than it expected over the past six months. The government's commitment to significant fiscal, financial sector and structural reforms, along with assistance from its European partners in improving its debt profile, has supported this improved performance.

The agency also views Cyprus' economic performance as stemming from its relatively flexible labor and product markets, its resilient services sector and its relatively low tax burden, all of which pre-date the economic crisis.

Cyprus' economic performance has been accompanied by a smaller drop in consumption than S&P anticipated, which it believes is partly linked to a general loss of confidence in Cyprus' banks.

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