Moody's downgrades Cyprus by two notches

Cyprus is the latest nation to be slapped with a downgrade by Moody's, with its rating cut two notches over concerns the country is heading towards a bailout.

Moody's said the country's economy has suffered following an accident which destroyed a key power plant earlier this month, and does not expect it to recover for a couple of years. The ratings agency downgraded Cyprus from from A2 to Baa1 and placed a 'negative' outlook on the country, signalling another downgrade is in the pipeline. "The main driver of today's two notch rating action is Moody's ongoing concern about Cyprus' fiscal position, which has been amplified by the accidental destruction of the Vasilikos power plant on 11 July 2011 as a result of an explosion at a nearby naval...