Cyprus raises EMTN bond programme ceiling by half

CYPRUS PLANS to increase the maximum amount it can borrow under its current medium term euro-denominated note (EMTN) programme to €9 billion from €6 billion this year, its debt chief said yesterday.

Phaedon Kalozois said the increase did not automatically imply an EMTN issue was imminent, but said such an issue was an option for the Republic.

“An EMTN issue is an option if and when market conditions permit,” Kalozois, who heads the Public Debt Management Office, said.

At present, the Republic has used about €4.72 billion under the EMTN programme.

“One of the reasons we are increasing from €6 to €9 billion is not because we will raise our issues to €9 billion, but because a small margin (to borrow) is considered a negative by investors who prefer frequent issuers,” Kalozois said.

Cyprus had in a report to the European Commission this month said it may seek to issue a new five or 10-year euro-denominated bond to help meet a financing target for this year of around €2 billion.

Kalozois also confirmed that another option was for a Schuldscheine, a type of debt instrument which is usually placed privately in the German market. An EMTN issue, however, was the most dominant scenario, he said. Kalozois said lead managers for a possible issue had been chosen though not formally appointed. He said that was part of regular planning by the ministry to tap any financing opportunity which may come up.

The island sold a one billion euro five-year bond in October, and privately placed another €145 million of five-year debt in February.

It projects that its public debt will rise to 61.6 per cent of gross domestic product in 2011, from 60.9 per cent in 2010.

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