Strong order book expected for bond issue

By Angelos Anastasiou
THE FINANCE ministry is gearing up for the €500 million public bond issue it has planned and has already started testing the waters through roadshows organised by the five banks it has commissioned to approach possible investors, as analysts report growing international appetite for Cypriot public debt.
In a written statement last week, the ministry had announced commissioning Deutsche Bank, Goldman Sachs International, HSBC, UBS Investment Bank and VTB Capital to approach investors in order to attend roadshows ahead of the upcoming bond issue.
According to Reuters, the first of the roadshows was scheduled to take place in London over two days, starting June 16, but officials from the finance ministry declined to confirm or deny the schedule. On Monday, local daily Phileleftheros reported that the roadshows will be carried out by officials from the finance ministry and the public debt management office both in person, as well as via teleconferencing sessions with potential investors.
Regardless of the logistics, however, international analysts expect a particularly strong order book for Cyprus. Receding concerns over the European sovereign debt crisis have driven yields across the eurozone to record lows, even in recently bailed-out countries like Portugal’s 2.8 per cent and Ireland’s 2.4 per cent. In this environment, investors are likely to be on the look-out for higher-paying issues, with Cyprus 10-year sovereign debt hovering around the 4.8 mark as of last week.
“This will be a higher-yielding asset for investors and may be seen as representing good value against other eurozone trades,” Exotix Partners chief economist Stuart Culverhouse told the International Financing Review.
The issue has been planned with a view to swapping internal for medium- to long-term international public debt, which would boost liquidity by repaying short- to medium-term debt held by local institutional investors. Additionally, the move is expected to further restore investor confidence in Cyprus, bringing the country one step closer to its full return to international borrowing and prompting further upgrades by credit-rating agencies.
Widespread optimism is not unfounded. Following the devastating banking collapse and a subsequent €10 billion bailout last year, Cyprus has been fully compliant with the adjustment programme imposed by its creditors, and its economy has shown more resilience than anticipated. Neither went unnoticed.
“They have been on track with their programme and that is a good thing to sell to investors,” said Culverhouse.

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.