Cyprus launches eurobond road shows

Cyprus will tap international markets for one billion euros in bonds to pay off maturing debt, finance its deficits in 2009 and 2010 and inject EUR 200 mln into the state-managed and deficit ridden Social Insurance Fund.
The first road-show starts in London on May 18, moving on to Frankfurt, Paris, Amsterdam and Milan in three days of extensive presentations in order to attract institutional investors to subscribe to the issue.
The EUR 1 bln issue, the first major foray into international markets since 2004 and the largest it has ever undertaken, represents part of about EUR 1.9 bln in net debt the island has maturing until the end of this year.
“This is being held under difficult circumstances. It’s a challenge, but we are optimistic that the issue will be a success,” said Finance Minister Charilaos Stavrakis who will head the missions abroad to raise the money.
The book building will close on May 27.
The issue is launched under the Republic's Euro Medium Term Note (EMTN) programme, which has a EUR 3 bln ceiling. At present, debt worth EUR 1.05 bln, excluding next week's offering, has been launched off the programme.
Soc Generale, BNP Paribas and Royal Bank of Scotland are the Lead Managers of the issue. Bank of Cyprus, Marfin Popular Bank and Alpha Bank are co-lead managers.
Cyprus is rated Aa3 by Moody's Investors Service, A+ by Standard and Poor's and AA- by Fitch Ratings.
“The pricing will depend on market conditions prevailing then,” said Stavrakis, who nevertheless is hoping that Cyprus will manage to close the issue successfully, unlike the UK and Germany, that saw recent bond issues end inconclusively.
Some of the advantages that Stavrakis will be pressing when making the presentations starting in London are Cyprus’ good finances, the best GDP growth rate forecast in the eurozone, second best unemployment rate, low inflation and a robust banking sector that has not required state assistance.
Stavrakis explained that the duration of the bond was purposely made to mature in 2013 since in that year, the Republic’s maturing public debt amount to a mere EUR 41 mln, whereas in 2012 the maturing borrowings amount to EUR 983 mln, while in 2014 the maturities amount to EUR 888 mln.