Government issues €1bn 10-year bond at a yield of 4.25% Georgiades says (Correct)

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(Corrects yield of 7-year bond in fourth paragraph)

By Stelios Orphanides & Angelos Anastasiou

Finance minister Harris Georgiades said that the government issued a €1bn 10-year bond at an average yield of 4.25 per cent today, a move that signals the final restoration of market access following the €10bn March 2013 bailout.

“We had a successful issue of a 10-year bond and we borrowed €1bn at a rate of 4.25 per cent,” Georgiades told reporters in Nicosia today.

“It is the lowest rate at which the Republic of Cyprus ever issued a 10-year bond and €450m (of the money borrowed) will be exchanged with bonds maturing in 2019 and 2020, while the other €550m will strengthen the government’s cash reserves in the near future after Cyprus exits its adjustment programme”.

It is Cyprus’ third successful market test after the country was shut out of markets in May 2011. The government issued a €750m five-year bond at an average yield of 4.85 per cent in June 2014 and a €1bn 7-year bond in April 2015 at an average yield of 4 per cent.

“What I want to stress is that Cyprus’ creditworthiness has been essentially restored,” Georgiades said. “I wouldn’t use the word ‘definitely’ since, as we have found out, there is in the economy nothing definite unless it is supported by a prudent and credible policy,” he said.

“This is the policy we applied in the past two years and has contributed to the restoration of the credibility of our country and we need to carry on with it”.

According to a statement issued late on Tuesday by the Finance ministry, the goal of the issue was to “further extend the interest-rate curve, mitigate refinancing risk through the easing of the debt-maturity timeline, improve relations with the investing public, and broaden the base of investors”.

“The order book recorded offers over €3.35 billion, which is the largest sum of offers the Republic of Cyprus has seen since its return to international markets in 2014,” the statement said.

The Finance ministry said there had been high international demand, with investors from the UK forming over 60 per cent of the final issue.

Fund managers and banks, it added, also featured strongly, comprising 52 and 23 per cent of the final issue, respectively.

In a speech at a charity gala organized by RCB bank on Tuesday night, President Nicos Anastasides congratulated Georgiades for the successful issue, noting that after four years in recession, the Cypriot economy returned to growth.

“Prudent policies have culminated in today’s exit to the markets and the restoration of Cyprus’ creditworthiness,” Anastasiades tweeted earlier in the day.

“We shall continue this way.”

Cyprus is rated B3, BB- and B+ by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings respectively. All ratings are below investment grade. On Monday, the public debt management office said that holders of the €750m bond maturing June 25, 2019, the €1bn bond maturing on February 3, 2020 and the €100m bond maturing on May 2, 2020, could exchange their bonds with today’s issue.

In March, Cyprus is scheduled to successfully complete its economic and financial adjustment programme agreed in March 2013.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • cherry2

    Rolling over old debt adding new debt surely the Troika should not allow this ?

    • Argent

      I thought you would have gathered by now that the TROIKA are a$$holes too.

  • GSP

    I thought this was due to happen tomorrow!
    Offer bonds for sale on the day Cyprus celebrates saying “No!”

    • Philippos

      Cyprus did not say ‘No!” in this instance. No was said by a different nation altogether on 28th October and it has sweet FA to do with Cyprus which makes the “Celebration” totally ridiculous

      • GSP

        As I commented on a different post here – a “No” from another country 75 years ago yet is considered a day of disruption here in la la land.
        Sorry, I missed out the ‘other country’ in this posting

      • Argent

        At last, some one that knows the fact of this so called Oxi day.

        • Pc

          Basically, two democracies celebrate that the former dictator in one of the two countries said no to another former dictator. Oh, the irony!

          • Argent

            The thing is though, that old AH only wanted to pass through Greece and use its ports.

      • disqus_ZPlOdQqScB

        Exactly.

      • cherry2

        Ridiculous comment considering the close links family & otherwise with Greece .

        • Philippos

          Close eh? Almost 100 years ago to the day Greece rejected the British offer of Cyprus in exchange of honoring its treaty with Serbia, which also tells you volumes about Greeks closeness with anybody and next second they tried an invasion in 1974 cooked up between Grivas and Constantine and finally they screwed us through their economic behavior via their bonds. Telika, they think we look like Lebanses and behave like Jews

    • Argent

      Cyprus never said no in the first place, that was Greece, and we all know what followed. Tomorrow, is the release of the new James BOND film.

      • GSP

        But Cyprus subsequently said “No” on a couple of occasions which also resulted in undesirable consequences. 🙂
        Some people are ‘Yes men”. Some races are ‘No men’
        ( Not snowmen, they’re fun)

        • Argent

          Snowuse.

  • Thank you, Minister. By the time we repay the debt, we will have borrowed €1 billion and will end up repaying €1 billion plus €425 million interest. Cypriots should feel really pleased to know that from their next ten years of sweat and toil, the bankers are going to make a cool profit of 425 million.

    Cypriots must boot out the current politicians, who get massive kick-backs from bankers. There needs to be a new party who will promise to amend the constitution – “No deficits. No borrowing.”

    • Slomi

      Very true.

    • I don’t think paying back the stake let alone the interest will be possible, Is it 425 or 42.5 ? either way its a huge amount for a small island.

  • Bruce

    Borrowing at 4.25%( 42.5 million euro interest ) plus sizable costs paid to arranging investment banks ( including Goldman Sachs ) and putting a substantial part of proceeds in non-interest earning cash does not show good financial management. Foreign investors are investing in Cyprus because they have confidence that they can make a quick financial-killing in the current global low nominal interest rate environment, but not in the real economy because they have no confidence that there will be the future demand for their products.
    Government and pathetic troika must get real and invest in the growth of the real economy of Cyprus rather than just engage in policies that are depleting the financial wealth and real resources ( eg. emigration of talented Cypriots abroad ) of Cyprus.

  • toxic

    they could get another 3.5 billion from the troika at less than 2%!!!! why pay more than double???

    • But that requires action and fulfilling commitments.

  • Bruce

    The execution of the MOU will be no more.