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S&P downgrades Cyprus deeper into junk

NICOSIA, Cyprus -- International ratings agency Standard & Poor's has cut Cyprus' credit rating to B, three notches deeper into junk because of the government's delay in swiftly negotiating a bailout with potential creditors in order to support its ailing banks.

The agency also warned in a statement Wednesday that another downgrade could follow. It said bad domestic loans held by Cypriot banks have increased faster than expected, possibly raising the amount of money they would need to recapitalize.

That would, in turn, push the country's debt to 130 percent of gross domestic product, making it difficult to service and increasing the risk that the debt may need to be restructured.

Cyprus asked for international financial aid in June to support its Greece-exposed banks.