Moody's downgrades Cyprus deeper into junk

(AP) International credit rating agency Moody's has driven Cyprus deeper into junk with a three notch downgrade to Caa3 over concerns that the country may ultimately default on its burgeoning debt level.

Moody's says more downgrades are possible for the country that is trying to finalize a bailout with international lenders to rescue its banks, which sustained massive losses on bad Greek debt and loans.

The agency said Thursday that an anticipated increase in the amount of money that Cypriot banks will need to recapitalize will push the country's debt to a point where it won't be able to pay it down.

The agency said that it believes that there is a significantly increased likelihood that Cyprus may default outright or seek for its debt to be written down.