1 bln raised with 4% yield
Finance Minister Harris Georgiades announced that the government’s second bond issue since the bailout programme two years ago was a success with EUR 1 bln raised with a 4% yield rate.
Georgiades said the 7-year bonds, listed on the London markets, were nearly twice oversubscribed and this affirms that confidence has been restored in the Cypriot economy which will help the country emerge from recession.
He said the money will be used to pay off older, more expensive debt and inject fresh liquidity into the economy.
The Ministry of Finance said that the EUR 1 bln RegS registered only fixed rate notes issue due 6 May 2022, pays a coupon of 3.875% and has a reoffer price of 99.250 with a spread of +367bp over mid-swaps, equivalent to +404.2bp over the 2% Jan-2022 DBR. The reoffer yield is 4%.
The joint lead managers in the deal were barclays, HSBC, Morgan Stanley and SG CIB.
“I believe this is a development that confirms the restoration of trust in the Cypriot economy on behalf of the international investment community. It is an important development which shows in the most tangible manner that the assessments of the investors regarding the Cypriot economy are positive”, Georgiades said.
He added that “this development, along with other positive developments over the recent period, such as lifting the restrictive measures, the passing of bills on foreclosures pending for a long time at the House, create the prospects for new i mpetus for the economy’s exit at last from the recession”.
Responding to a Fitch opinion that Cyprus will not use the whole amount left in the bailout programme, Georgiades said “it is a fact that the needs of the Cypriot economy in relation to the official financing from the European Support Mechanism and the IMF will be less” because the banks will not need further state aid and the deficits in the budget have been constrained, which means that “we will not have to load a further burden on the households and businesses”.
Asked if the Troika (EU Commission, IMF and ECB) would now be unnecessary, Georgiades said the aim was “to create the circumstances that would allow the economy to function without dependencies”.
Georgiades also said that the government was determined to push forward with its reform and recovery policy.
Cyprus returned to the bond market in June last year making the fastest comeback of any bailed out eurozone country by selling a five-year bond. It issued a 750 mln euro bond issue with a 4.75% coupon rate.