1 bln raised with 4% yield

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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