ADVERTISEMENT

NICOSIA, Cyprus (AP) Credit rating agency Standard & Poor's has upgraded Cyprus' sovereign debt by one notch to B- over what it says is a receding risk that the bailed-out country will default on its government borrowings.

The agency said in a statement Friday that its outlook on the country's economy is stable.

It said the Cypriot economy will shrink less than it originally forecast. It also expects authorities to stick to the terms of a painful rescue deal agreed on in March with other eurozone countries and the International Monetary Fund.

The agreement sanctioned a grab of uninsured deposits in the country's two largest banks.

Cypriot President Nicos Anastasiades hailed the upgrade, saying that it's indicative of a gradual return of confidence in the economy.