* €750m 5-year issue a "success" *
The government plans to proceed with a second bond issue, maybe as early as next autumn, after the relative success of the 5-year
Encouraged by its first official foray back into the markets, the aim is to set the bar higher at
However, this venture will probably wait to see how the banks fare in their own capital raising efforts and in particular with the upcoming stress tests in October when their liquidity ratios will be put to task.
This will also be after the sixth review by the Troika of international lenders.
This is probably why Finance Minister
When the book opened earlier in the day it received
"This will be used to repay a big part of existing, more expensive and more short-term internal borrowing, which had been exerting constant pressure on public debt management," Georgiades later explained. "It will also help boost liquidity, and at the same time it will also enable the release of funds currently trapped in the system."
The interest coupon was initially expected to be around 5.00-5.25%, Reuters said it opened with an official guidance of 4.90%, which is tighter than initial price thoughts released on Tuesday and having dropped to 4.85%, settled at 4.75%.
"It just shows that the chase for yield is still very much on and 4.75-4.85% for 5 years in a low inflation environment is going to get a lot of attention. It's been a supportive factor of the euro for many months now," said
"Bond yields have been falling, there has been a string of good news on the macroeconomic front and if you have any lingering worries that
"So, as long as the coupon (interest rate) is not too high and it helps to smooth out maturities then it is a sensible move right now," she added.
The issue follows a smaller
"We are satisfied with the very positive outcome and the fact that the rate is clearly below 5% suggests that
"With the pace of reforms continuing, we have every reason to believe that future reviews (by the Troika of international lenders) will continue to be positive," Prodhromou said.
"While the economy was badly burnt in the bailout [a year ago], forcing the government to trim the holdings of depositors to recapitalise the banking sector,
"Standard & Poor's upgraded the country's credit rating to B after the economy only shrank by 5.4% last year - less than expected by the IMF - and predicted that the contraction would slow to 4% this year," the FT had added.
On Friday, Fitch Ratings described the return to the international capital markets as positive, noting however that this does not mean that market access will be permanent as risks to the economy outlook remain.
The rating agency pointed out that the issue came 15 months after
"Issuing five-year bonds strengthens financing buffers within
It also noted that the Cypriot authorities plan a smooth bond redemption profile through future marker operations, as the island's debt repayments are set to increase to around
"Although not as bad as feared last year, the recession will remain deep (we forecast a 3.9% GDP contraction in 2014). The core domestic financial sector has been recapitalised, but asset quality has deteriorated," Fitch noted.
Furthermore, Fitch points out that
"This will be beneficial for funding costs, debt sustainability and wider economic sentiment. However, the fall in yields is not necessarily commensurate with a fall in credit risk," the agency concludes.
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