Cyprus has paid off early an International Monetary Fund loan that was part of a €10 bln rescue package in 2013 from lenders to save the island’s banking system.
Finance Minister Constantinos Petrides said the loan’s early repayment would bolster the country’s credibility in the eyes of investors and improve its ability to raise money directly from international markets.
“Our target is to secure our country’s stability and growth perspective,” Petrides said in a statement.
Cyprus was able to repay the loan via a low-interest double bond issue that yielded €1.75 bln.
It secured €1 bln from a 10-year bond issued at a 0.73% rate. A 20-year bond raised €750 mln at 1.33%.
Total pledge value exceeded €13 bln, comprising the largest bid in of this type in Cyprus’ history, and the bonds were oversubscribed seven times, Petrides said.
“This demonstrates the depth of trust that international markets show toward Cyprus’ economy.”
He said the bond issues cover most of Cyprus’ financing needs for 2020 and will save the country €15 mln in interest payments on the IMF loan.
“This proves that Cyprus is able to cover its own financing needs from the markets.”