The resolute implementation of the memorandum, the positive quarterly reviews by the troika, the better than forecasted indicators of public finances all contributed to Wednesday's successful €750 million euro bond issue, which the government is entitled to be proud of. It may also have been a bit surprised by the success of the issue, which was significantly over-subscribed, interest rising to €2 billion when the book opened, according to Reuters.
This was the reason the government upped the size of its bond issue from the €500 million initially announced, to €750 million. Also significant was that the interest was below 5%, eventually settling at 4.75%. This may still be considered high compared to the yields of other states' bonds and the low bank interest rates across the eurozone, but for a country that is in an assistance programme it was a positive step in the economy's rehabilitation, an indication that the state was regaining some of the trustworthiness it had lost.
But the successful issue is more than a vote of confidence in the government's management of public finances. It has practical benefits as it would provide Cypriot banks with additional liquidity. The money raised would be used to re-finance domestic debt – government bonds that are held by the local banks – thus making cash available locally. Perhaps more importantly, the successful issue could make it easier for the Cypriot banks to raise capital as well. The
President Anastasiades and finance minister
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