Chemistry Board

The euro zone is not considering a debt restructuring for Cyprus, the EU's top economic official was quoted on Friday as saying, as the heavily indebted island struggles to negotiate an international aid deal.

Cyprus applied for a financial rescue last June after its banks suffered huge losses on the EU-approved writedown on Greece's debt. But it has so far failed to persuade its European partners to sign off on the package, given concerns the level of the island's indebtedness means it would be unable to repay the aid without further concessions from international lenders.

But "a haircut is not an option for us," Olli Rehn, the European Economic and Monetary Affairs Commissioner, told the German business daily Handelsblatt in an interview.

Ratings agency Moody's slashed Cyprus's credit rating by three notches late on Thursday on an expected rise in its liabilities, adding that it saw a 50 percent probability the Mediterranean island would "default outright or press for a distressed exchange" on its debt.

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