While Nicosia is said to be seriously considering early repayment, no final decision has been made yet.
Current market conditions have prompted the government to weigh selling new debt earlier than originally planned, a second official told Bloomberg.
Yields on Cypriot 10-year bonds dropped to 1.37% last week, the lowest since 2015, when Bloomberg began compiling the data.
Cash-strapped Nicosia agreed to the Russian loan in 2011, at a time it was losing access to financial markets.
The depths of the economic crisis saw rising non-performing loans, with banks exposed to a super-leveraged property market. Government debt was downgraded to junk status.
In seeking funding from Moscow, then president Demetris Christofias, was trying to avoid requesting a bailout from the European Union and the International Monetary Fund. This risky gambit failed to pay off as Cyprus ultimately agreed to a harsh bailout in March 2013.
This would not be the first time that Cyprus opts for early repayment on debt. In July 2017 Nicosia repaid almost one third of its loan from the IMF.
The IMF expects the Cypriot economy, one of the fastest growers in the euro zone this year, to keep expanding.
Creditors have urged the government to step up the pace of structural reforms in a number of areas such as the public sector and judicial system.
The loan from Russia was restructured in 2013 under the current administration, after the country secured a bail-out from international lenders and depositors at its two biggest lenders took a bail-in on their deposits. The loan’s repayment period was extended to 2021 and the interest rate was cut to 2.5% from 4.5%.
The outstanding amount of the loan is €1.57 billion.
Source: Financial Mirror