Mammoth bond allows government to tap €1.5bn at 2.4%

The government on Tuesday issued a €1.5bn European Medium Term Note with a ten-year maturity with a coupon rate of 2.375 per cent and a primary market yield of 2.4 per cent.

The issue, the first after the island’s sovereign rating was upgraded by Standard and Poor’s on Friday to BBB-, the first investment grade since mid-2012, is the largest ever carried out by Cyprus and accounts for roughly 7.5 per cent of the island’s gross domestic product (GDP).

Government spokesman Prodromos Prodromou said the new debt issue, which was almost four times oversubscribed, establishes conditions that will allow society to benefit.

“The strong interest and the historically low yield confirm the confidence of the global financial community in the Cypriot economy, its prospects and the policies applied,” he said.

With Cyprus being assigned an investment grade rating and its bonds accepted by the European Central Bank (ECB), “today’s successful issue is a clear sign of Cyprus’ prospects,” Prodromou added.

The difference separating the yield from comparable German securities was 192.5 percentage points, the finance ministry said on Tuesday.

Underwriters of the bond issue were Barclays, JP Morgan, Morgan Stanley and Societé Generale.

According to the Public Debt Management Office (PDMO), the government is facing maturities of €1.3bn next year on top of €713m in maturing debt in the second half of 2018. These amounts exclude a €500m bond maturing on December 17, 2018 and a second maturing on December 16, 2019, both part of the €3.2bn of the government support extended to the Cyprus Cooperative Bank earlier this year.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.