Eurobond issue successfully launched

CYPRUS announced yesterday it had successfully launched a 280 million euro bond issue in a move it said reflected the international trust in the island’s economy.

The seven-year international bond, the island’s third since 1997, was issued last Thursday and was underwritten by Merrill Lynch and Warburg Dillon Read, according to a Central Bank statement. It has a coupon of five per cent and yielded 5.126 per cent at the issue, it added.

Cyprus, Europe’s top rated non-EU country, is rated A2 by Moody’s Investors Service and A+ by Standard & Poor’s Corp. Its outstanding bonds are a 350 million euro/ecu issue launched in July 1998 and a $300 million five-year bond launched the previous year.

“The successful issuing of the bond emphasises once again the trust that Cyprus enjoys among foreign investors and underlines Cyprus’s European prospects,” said the statement.

One of six countries on a fast track to join the European Union, Cyprus has chosen to borrow abroad to avoid putting pressure on local interest rates and squeeze the domestic credit market. The government is forced to borrow to finance a fiscal deficit forecast to grow to 5.9 per cent of gross domestic product this year if no measures are taken to boost state revenues.

The deficit is particularly worrying because of the island’s ambition to qualify for the European single currency simultaneously with its EU accession, which is not expected before 2003.

A maximum fiscal deficit of three per cent of GDP is one of the key criteria for joining the single currency and Finance Minister Takis Clerides said a package of taxation under discussion now with political parties would reduce the deficit to two per cent of GDP by 2002.

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.