Cyprus wants to issue EUR 1 bln in bonds

The Cyprus government has covered 20% of its total 2009 financing needs during the first 15 days of the year after it raised a total of EUR 315 mln through two bond issues for five years.
In the first week of January, the government raised EUR 150 mln though 5-year bond issue at an average yield of 4.7%, while in the second issue held a week later, the government raised EUR 165 mln in 5-year bonds at a yield of 4.77%.
Minister of Finance Charilaos Stavrakis described the response as satisfactory, adding that the state is planning to issue more bonds to raise a further EUR 1 bln.
Stavrakis does not appear to be worried about the high cost at which the government is raising the funds, describing the current environment as very competitive bearing in mind the “tough economic circumstances.”
He noted that the financing needs are for the time being the “biggest problem all eurozone governments are facing” due to the fact that there is a “huge deficit and great need for refinancing public debt”.
Cyprus needs to rollover a total of EUR 1.7 bln in maturing public debt during 2009, he added.
“We are very optimistic because thanks to our very good economic performance and our robust public finances we will be able to secure the necessary loan to cover all public needs”, he noted.
Referring to efforts to raise a further EUR 1 bln, Stavrakis said contact has been established with foreign banks who will be asked to provide their services.
“Representatives of UBS and Dresdner Bank are here to discuss whether raising such a big amount is feasible, bearing in mind Cyprus’ circumstances”, he said.
Stavrakis noted that “there seems to be a great interest on behalf of foreign investors due to Cyprus’ good economic data”.
Regarding the reduction of interest rates, the Minister expressed his personal view that this could happen in the summer, due to the world tendency regarding interest rates and the situation of the Cypriot economy, which will lead to limited demand for loans.