One of the officials, who asked not to be identified as no final decision has been made, said the initial offering will be for about €500 million ($680 million) and will probably be held after a share sale by the Bank of Cyprus, the country’s biggest bank.

The government is trying to build a yield curve for Cypriot sovereign securities, following a four-year exile from international markets, which left the country dependent on a €10 billion lifeline of emergency loans from the euro area and the International Monetary Fund.

The September issue would be the second bond sale after a June offering, which saw Cyprus raise €750 million in a sale of five-year notes to yield 4.85%. The sale will also help the government replace internal short-term borrowing with cheaper longer-term financing, one official said.

Last month, Cypriot Finance Minister Haris Georgiades said the country would issue new bonds once market conditions improve.

Cyrus was granted a €600 million aid tranche yesterday, as officials representing the country’s lenders said its economic adjustment program is on track and recession is bottoming out.

Bank of Cyprus said on July 4 that it will “explore investor interest for a potential capital increase,” following an ultimatum by Central Bank Governor Chrystalla Georghadji to raise at least €1 billion in new capital by Aug. 8, before euro-area bank stress tests.

Source: Bloomberg