CYPRUS: 10-year T-bill yield at 4.15%, new four-year low

The yield on 10-year Cyprus sovereign bonds dropped to 4.15% on Friday, the lowest level in almost four years, with government sources attributing the decline to the start this week of the ECB’s €1.14 trln quantitative easing (QE) programme and bond purchasing programme to revive the Eurozone economy.

However analysts believe this excuse may be far fetched as Cyprus will not be able to take advantage of the ECB’s money-printing until parliament passes a long-overdue bill on foreclosures and banks start to recover their bad loans, last estimated at 50% of the entire island’s loanbook.
The yield on the 10-year Treasury bills issued in 2010 declined by 48 basis points to 4.15% on Friday reaching a new four-year low, following the 4.50% high on September 8 last year. The yield of the 5-year bond (matures in 2019) also declined, to 4.07% also shedding 48 basis points compared with Thursday.
Cyprus aims to see bond purchases of about €500 mln from the ECB’s QU programme, but cannot participate in the scheme until it gets the all-clear from the fifth programme review, probably in April.
This is why Finance Minister Haris Georgiades has been overly confident that Cyprus will be able to return to the markets some time in 2015, with rating agencies waiting to see if Cyprus will comply with its €10 bln bailout programme by sticking to a fiscal programme and keeping up with the reform programme, that includes privatising state monopolies or selling government-owned assets to raise some €1.4 bln by 2018.