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FINANCE: Cyprus raises one bln euros in first ever 15-year bond

19 February, 2019

Cyprus on Tuesday raised 1 billion euros through its first ever 15-year government bond issue which was eight times oversubscribed.


“The issue of the first 15-year bond of the Republic of Cyprus has been completed on the international markets: €1 billion, interest rate 2.75%, with total offers of €8 billion! Strong confirmation of confidence and assurance of stability and development prospects for our country,” tweeted Cypriot Finance Minister Harris Georgiades on Tuesday.

Citibank, Goldman Sachs International and HSBC were commissioned by Cyprus to manage the bidding.

Last September, Cyprus was lifted above investment grade, by international rating agencies, following the financial crisis that led to a 10-billion-euro bailout by international lenders in 2013.

The Finance Ministry said the new loan is intended to re-finance part of Cyprus' sovereign debt with cheaper money ahead of an overconcentration of loan maturities by the end of 2031.

This bond issue will be used to repay installments on a Russian loan taken out to avert a bailout – which proved futile - and the Euro Medium Term Note (EMTN). Within 2019, Cyprus is scheduled to pay two equal installments of €312.5 mln  to repay Moscow.

The Russian loan was obtained when the financial crisis first started to bite in 2011, with a left-wing administration in Nicosia turning to Russia in an attempt to fend off the IMF-EU intervention which led to the bailout in 2013.

Cash-strapped Cyprus secured a €2.5 bln loan with a 4.5% return from Russia, a country with serious financial interests on the island.

Cyprus will have to pay back Russia the same amount each year until 2021.

Cyprus' sovereign debt currently stands at 105.11 percent of gross domestic product and is expected to drop to just below 98 percent in 2020.