Cyprus Finance Minister Vassos Shiarly on Friday said Moody\'s downgrading of Cyprus\' government bond rating is a distressing event. He said the government was making efforts to conclude a bailout agreement as soon as possible. Moody\'s on Thursday downgraded Cyprus bond ratings three notches from B3 to Caa3, with a negative outlook because of an anticipated rise in its debt burden and concerns over a possible default. Cyprus asked for a bailout from the European Union (EU) and the International Monetary Fund (IMF) in June last year after its two largest banks suffered heavy losses due to their exposure to the Greek debt crisis. The banks applied for state support to raise their tier 1 ratio capital to the level required by the European Banking Authority. Cyprus and the troika representing the European Commission, the European Central Bank and the IMF reached a preliminary bailout agreement in November last year with bailout aid expected to be around 17.5 billion euros (23 billion U.S. dollars). Out of this, 10 billion euros was tentatively earmarked for banks recapitalization and 7.5 billion euros for covering debts and government finances until the end of 2015. However, the amount set aside for the banks is still under scrutiny by international audit firms and uncertainty over the issue is holding back the bailout agreement. Cyprus says it can meet its needs only up to March. Moody\'s said they downgraded Cyprus because initial estimates by auditors said the recapitalization amount is going to be higher than originally expected. They added a negative outlook to the Cyprus economy was given because of the delay in disbursements by the European Stability Mechanism and the IMF may create a severe liquidity crisis for the government. Shiarly insisted that even if sovereign debt rose to 150 percent of GDP after receiving bailout support, Cyprus would manage. However, he conceded that Cyprus would miss a Jan. 21 Eurogroup meeting on account of a further delay in finalizing a report on the needs of the banking system, originally expected on Jan. 15. That would leave final discussions on the memorandum and signing of the bailout agreement to a new state president to be elected in mid-February. Polls predict that the head of the next Cyprus government will be right-wing opposition leader Nicos Anastasiades. Anastasiades is hosting later on Friday an extraordinary session of the European People\'s Party (EPP) in the southern city of Limassol. He said ahead of the meeting he would support the preliminary bailout memorandum.