Fitch downgrades Cyprus sovereign debt rating to "BB-" from "BB+" because of the continiously high uncertainty in public sector and high bank recapitalization costs as well as "significantly underperformed expectations".
Cyprus will shrink more than 2% in 2012, deeper than "forecast in Fitch's review of the rating in June 2012 and Cyprus will remain in recession into 2014."
Fitch affirms that the delay in official support agreements and high level of uncertainty on bank recapitalization costs have "contributed to the deteriorating economic conditions and raised uncertainties about public sector reform and the correction of macroeconomic imbalances."