South Cyprus' credit rating slashed amid bailout crisis

US credit agency Standard & Poor's (S&P) slashed Greek Cypriot administration's rating and lowered Hungary's outlook on Thursday as concern builds that the deepening bailout crisis in south Cyprus might impact the rest of the eurozone.

Greek Cypriot administration'scredit rating was cut from CCC+ to CCC while S&P cut Hungary's rating outlook to negative but affirmed its BB rating.

S&P cited the increasingly worsening banking sector as the reason for downgrading south Cyprus's rating.

"We believe that in the absence of a credible alternative source of capital and fiscal financing, the risk of a disorderly credit event is rising," S&P said in its statement.

A second downgrade was likely unless south Cyprus managed to implement a meaningful financial policy, the credit agency said.

Hungarian parliament's approval of an amendment to its constitution, a decision heavily criticized by the EU and the United States, in part resulted in the lowering of its credit outlook, according to S&P's statement.

"Recent governance changes at the National Bank of Hungary and amendments to the constitution could undermine Hungary's institutional effectiveness and the quality and predictability of policy making," the agency said.

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