Fitch downgrades Cyprus rating deeper into junk

NICOSIA, Cyprus Credit ratings agency Fitch has downgraded Cyprus deeper into junk territory by two notches to BB- and warned of further slides because of a weakening economy and ongoing uncertainty over how much aid the country's ailing banks will need to recover from their exposure to Greece's economic woes.

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Fitch said in a statement Wednesday that a delay in the Cypriot government's negotiations with potential creditors for a bailout has contributed to the country's worsening problems. The agency said Cyprus' economy will shrink by more than 2 percent of gross domestic product this year and remain in recession into 2014.

It said the country's deficit will be over 5 percent of GDP this year, with the debt peaking around 120 percent of GDP in 2014.