Bailout candidate Cyprus on Friday ruled out any "haircut" on its debt in order to help pave the way for much needed financial aid.
"For a haircut to happen, it needs the consent of the 27 (EU member states} and Cyprus is not about to accept such a thing," President Demetris Christofias told reporters.
The Eurogroup of eurozone finance ministers and the European Central Bank itself on Friday ruled out a partial debt write-off for Cyprus.
Eurogroup chief Jean-Claude Juncker, speaking on German public radio Deutschlandfunk, said a haircut for Nicosia was "not one of the instruments we see as a priority at the moment."
"We've agreed ... to exceptionally undertake a partial debt write-off in the case of Greece only," said Juncker, who is Luxembourg's prime minister. "To that extent... I would rule it out from my point of view."
Juncker said the Eurogroup hoped to wrap up its deliberations on aid to Cyprus by January 21.
Nevertheless, there is a fear that the level of Cyprus's debt would not be sustainable. "We'll have to examine all possible measures to make it sustainable," ECB executive board member Joerg Asmussen said.
Nicosia requested a bailout in June when its two largest Greek-exposed banks asked for assistance after failing to meet EU capital buffer criteria.
The money needed by Cyprus has been widely reported to total 17.5 billion euros ($23.1 billion) -- 10 billion euros for the banks, 6.0 billion euros for maturing state debt and 1.5 billion euros for public finances.
Earlier this week, the government secured a 250-million euro ($330-million) loan from public sector pension funds to help it pay bumper December salaries.
And the finance ministry said its fiscal needs are covered until March when it hopes the first tranche of bailout money will be paid out.
The country's entire GDP in 2011 was 17.97 billion euros and, according to 2013 budget projections, it is expected to shrink 2.4 percent this year.
There was more bad news on Thursday when Standard and Poor's slashed Cyprus's credit rating by two notches to CCC+, a level indicating a country is vulnerable to default.
Standard and Poor's said the eurozone member was facing increasing financial pressure, with bailout negotiations still unfinished.
"With the government's financing options increasingly limited -- coupled with what we view as the hesitant attitude of Cyprus' eurozone partners toward sharing the cost of a severe banking crisis -- we view the risk of a sovereign debt default as considerable and rising," the ratings agency said.
The S&P downgrade puts Cyprus even further into junk territory. It also issued a negative outlook.
The agency acknowledged that while Cyprus's bailout talks with the International Monetary Fund, the European Union and the European Central Bank had been slow, some progress had been made.
It also welcomed "far-reaching spending cuts" included in the government's 2013 budget proposal, but warned: "We believe the budget's underlying revenue assumptions may be too optimistic."
The Cypriot parliament has approved a severe austerity budget that cuts public sector salaries and pensions while introducing a wide range of tax hikes.
Speaker Yiannakis Omirou said the credit rating downgrade was worrying and stressed the need to accelerate the negotiations with the troika in order to conclude a loan agreement, the official CNA news agency reported.