LOWER RATING: Ratings agency Standard & Poor's cut Cyprus' sovereign debt grade one notch deeper into risky territory on Thursday and warned of further downgrades if the country's troubled banks continue to strain public finances.

THE DETAILS: The downgrade to BB from BB+ highlights the battle the island nation of less than a million people faces to fix its sagging economy after becoming in June the fifth country to seek financial aid from its partners in the 17-country group that uses the euro. Projections are that Cyprus' economy will contract by 1.5 percent this year and register no growth in 2013.

THE OUTLOOK: The country is in talks with the European Union and the International Monetary Fund on a rescue package that S&P estimates will amount to €11 billion ($13.5 billion), or 60 percent of the country's gross domestic product.