Cyprus to roll over â‚¬1 billion government bonds held by domestic investors

Cyprus announced it will roll over local government bonds of €1 billion euro, as part of the political agreement reached in the March 25 Eurozone Finance Ministers (Eurogroup) meeting over a €10 billion bailout.

"On June 27, 2013 the Republic of Cyprus will offer to exchange a number of existing local government bonds with a total nominal value of €1,0 bn, which mature during the economic adjustment programme period (2013-2016Q1), with 5 new bonds with correspondingly equal coupon rates and 5-10 year maturities," a press release issued by the Ministry of Finance said.

The Finance Ministry noted that "this debt management exercise is in accordance with Cyprus’s commitments under the programme agreed with international partners and in line with the political agreement reached in the March 25, 2013 Eurogroup."

"The transaction is intended to facilitate the cash-flow management of the Government and to ensure adequate funding with terms that do not compromise the achievement of our long-term public debt target," the release added.

Concluding, the Ministry noted that this action "is not directed at reducing public sector debt through the participation of private sector investors. With this transaction, the full programme commitment of the Republic of Cyprus for a €1 bn long-term domestic refinancing is completed and no further action is required in this respect."

The roll over is included in the debt sustainability analysis conducted by the Troika which estimates that Cyprus` public debt will peak at 126% of GDP in 2015, while from 2015 onwards public debt is estimated to follow a declining path, reaching around 122% of GDP in 2016 and around 122% in 2020.