News Column

Cyprus returns to bond markets a year after receiving bailout

June 18, 2014

Athens (Alliance News) - The government of Cyprus on Wednesday said the country has returned to international markets just over a year after turning to a multi-billion-euro bailout to save it from bankruptcy.

Cypriot President Nicos Anastasiades said the government raised 750 million euros (1.02 billion dollars) in a sale of five-year notes via banks at a price to yield of 4.75%.

The goverment said it received orders of around 2 million euros.

In a televised address, Anastasiades stressed that "today's success by no means marks the relaxation of efforts to reform and reorganize the economy."

Last week the Finance Ministry announced that it had appointed five international banks to arrange the sale, among them Deutsche Bank, Goldman Sachs International, HSBC, UBS Investment Bank and VTB Capital.

Based on the island's international adjustment programme, it had been set to return to the markets in late 2015 or early 2016.

Cyprus sold a 100-million-euro private placement back in April at an interest rate of 6.5%. The bond was sold to an overseas investor and was seen as an initial test for a potential public bond market return.

Nicosia has been shut out from international bond markets since May 2011 due to a rise in yields on its benchmark bonds. Yields have since fallen from 14 to 5%.

Unlike other eurozone countries, the condition attached to Cyprus' bailout was a haircut - or "bail in" - on bank savings.

Under the bailout programme agreed in March 2013, large depositors in the Bank of Cyprus and Laiki Bank were forced to take considerable losses as a condition for Cyprus receiving 10 billion euros from the EU and the International Monetary Fund (IMF).

The programme foresees covering the island's financial needs until the first quarter of 2016, but some 3 billion euros of debt will be coming due over the 18 months after the programme ends.

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Source: Alliance News

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