Two new EMTN is­sues

Financial Mirror (Cyprus) - - FRONT PAGE -

The gov­ern­ment is plan­ning two new in­ter­na­tional debt is­sues this year, with Fi­nance Min­is­ter Haris Ge­orghi­ades say­ing on Mon­day that the aim this year is to re­fi­nance some 2.9 bln euros of debt.

Ge­orghi­ades told Reuters the gov­ern­ment is pre­par­ing for two is­sues un­der its Euro­pean Medium Term Note (EMTN) pro­gramme, hav­ing suc­cess­fully tapped in­ter­na­tional mar­kets last June with a 750 mln euro is­sue taken un­der the same pro­gramme.

“Cyprus is im­ple­ment­ing an am­bi­tious pro­gramme of eco­nomic re­form and con­sol­i­da­tion which is al­ready de­liv­er­ing early and tan­gi­ble re­sults. On such sound foun­da­tions we are aim­ing to re-es­tab­lish sus­tain­able mar­ket ac­cess,” the Fi­nance Min­is­ter said.

Ge­orghi­ades told Reuters that the up­com­ing debt is­sues would not sub­sti­tute but will com­ple­ment ex­ist­ing fi­nanc­ing from lenders.

Mean­while, fi­nan­cial news site Stock­watch said that the gov­ern­ment faces con­sid­er­able pres­sure to re­fi­nance a large pile of debt in an in­creas­ingly volatile en­vi­ron­ment and amid the mount­ing ten­sions with its of­fi­cial cred­i­tors.

A to­tal of 83 mln euros in bonds ex­pires in Jan­uary and a fur­ther 58 mln by the end of Fe­bru­ary. An ad­di­tional 567 mln in trea­sury bills is due to ex­pire at the end of March rais­ing the to­tal for the first quar­ter to 708 mln euros.

Over the past few days, the gov­ern­ment pro­ceeded to new trea­sury bill of­fer­ings rais­ing 218 mln euros, while another 71 mln was raised in the fourth quar­ter of 2014 through the is­sue of 6-year re­tail bonds, mostly to in­ter­na­tional in­vestors.

In De­cem­ber, another 350 mln euros flowed into the gov­ern­ment’s trea­sury from the Euro­pean Sta­bil­ity Mech­a­nism, which has since been frozen due to dis­agree­ments over the post­pone­ment of the fore­clo­sures bill. How­ever, the IMF sus­pended its share of the bailout money, amount­ing to 86 mln euros, fol­low­ing the about­turn by par­lia­ment. After a rel­a­tively man­age­able sec­ond quar­ter dur­ing which 149 mln euros of is­sues are ex­pir­ing, the gov­ern­ment will face a very dif­fi­cult third quar­ter dur­ing which a to­tal of 1.12 bln euros will ex­pire mainly due to a large bond is­sue of 1.091 bln ex­pir­ing on July 1.

The gov­ern­ment hopes that through the on­go­ing im­ple­men­ta­tion of the nec­es­sary re­forms re­gard­ing pub­lic fi­nances, it will be in a po­si­tion to sus­tain and ex­tend its cur­rent fis­cal sur­plus that will fa­cil­i­tate part of the up­com­ing fi­nanc­ing needs.

The last quar­ter of this year will call for an ad­di­tional 927 mln euros in ex­pi­ra­tions mainly due to an EMTN of 863 mln euros ex­pir­ing on Novem­ber 1, ex­ert­ing fur­ther pres­sure on the gov­ern­ment. How­ever, by that time, the Anas­tasi­ades ad­min­is­tra­tion should have the ini­tial re­port on the pri­vati­sa­tion of the tele­coms company Cyta as part of a wider four-year plan to raise some 1.4 bln euros from the sale of state-as­sets.

In early De­cem­ber, the min­istry of fi­nance also em­barked on a road show in or­der to ex­plore for­eign in­vestors’ in­ter­est in po­ten­tial Cyprus new debt.

In spite of some neg­a­tive de­vel­op­ments that oc­curred since then, the 10-year Cyprus gov­ern­ment yield re­mains at about 5%.

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