“The three-notch upgrade reflects the lower expected loss of the broadly unchanged cover pool under Fitch revised residential asset assumptions,” said Fitch.

“The Stable Outlook on the covered bond rating reflects the slower pace of underlying asset quality deterioration and progress in economic recovery, albeit still fragile.”

The ratings house said that the upgrade is based on the partial economic recovery of Cyprus, in spite of a still fragile macroeconomic environment and high unemployment rate.

“Cypriot public finances improved and the banking sector made progress in restructuring with signs of stabilisation in bank deposits.”

The rating for the Bank of Cyprus remains at CCC/C.

Source: InCyprus