Global rating agency Standard & Poor's has raised its sovereign debt rating for Cyprus to B- from CCC+, saying that fears of the island reneging on bailout terms had receded.
The upgrade by the agency, which had given Cyprus selective default status in July when it swapped government bonds for new ones with longer maturities as part of the bailout deal, provided a welcome boost for a eurozone economy in deep recession.
It was swiftly welcomed by conservative President Nicos Anastasiades, who signed the painful March bailout deal with the troika of the European Central Bank, the European Commission and the International Monetary Fund to avoid imminent bankruptcy.
"The upgrade from one of the stricter rating agencies, Standard and Poor's - the first after three years of continuous downgrades - is the result of painful sacrifices of our people and also the consistent and firm policy the government and political forces have followed these past eight months," Anastasiades said.
"Messages, such as this one, foster the gradual restoration of confidence in the Cypriot economy, which is essential to achieve kick-starting the economy as soon as possible."
Standard & Poor's said its upgrade reflected the island's passing of two successive reviews by the troika of its compliance with the undertakings it gave in March in return for 10 billion euros ($A15 billion) in emergency loans.
"In our view, the immediate risks to Cyprus's programme implementation, and, therefore, to full and timely payment of debt service, appear to have receded," the New York-based agency said.
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