Cyprus bond issue over-subscribed

Cyprus has decided to increase the amount of its euro-bond issue from EUR 1 bln to EUR 1.5 bln following the massive over-subscription witnessed today when the book-building for the 4-year bond issue was held.
Finance Minister Charilaos Stavrakis, who played a crucial part in the success of the issue by heading roadshows in London and Paris in addition to individual presentations to foreign fund managers described the success as unprecedented.
“Our issue was over-subscribed by a record 5.5 times since we received bids for EUR 5.5 bln against the EUR 1 bln on offer,” said Cyprus’ jubilant Finance Minister at a press conference.
Cyprus needs the funds to cover maturing debt of EUR 1.9 bln during 2009 as well as cover its deficits in 2009 and 2010 as well as invest EUR 200 mln into the deficit ridden Social Insurance Fund.
The agreed rate was described by Stavrakis as “very competitive” at 3.85%, which is lower than the 5% budgeted by the government as the cost of borrowing during 2009.
Stavrakis told the Financial Mirror that EUR 1.25 bln were subscribed by foreign investors and EUR 250 mln by local investors. There were a total of 103 foreign investors including central banks, large commercial banks, insurance companies from the US, UK, France and Germany.
The proceeds from the issue are expected on June 3, 2009.