articles | 09 January 2015

Decent interest for Cyprus bonds

Cyprus government bonds are expected to attract interest from foreign investors, according to sources, however, uncertainty in the markets about the future of Greece in the eurozone may affect the yield paid by the government.

Finance Minister Harris Georgiades revealed on Monday that the government plans to go to international markets twice in 2015, although he did not reveal further details.

This would be one year earlier than planned under the government’s bailout programme with the troika of international lenders – the European Commission, the International Monetary Fund and the European Central Bank –, which expires in mid-2016.

“The goal is to have the economy stand on its own two feet, get loans from international markets and stop being dependent on the troika,” Georgiades told state radio.

Cyprus already took advantage of low yields on international bond markets in June 2014 by issuing a €750 million five-year European Medium Term Note (Eurobond) at a yield of 4.75%.

George Zois, Head of Equity and Debt Capital Markets of the Hellenic Region at Exotix brokerage, expects interest from foreign investors in the issue. “It is quite likely that we are going to see a decent show of interest,” he told The Cyprus Weekly. However, he cautioned about potential contagion from Greece. “Greek troubles could affect the yield through contagion fears and broader risk aversion,” he added.

At the end of December yields on Cypriot ten-year government bonds were 5.02% ­– higher than in June 2014. However, they were much lower than in Greece, where the equivalent yield was 9.9%. Cyprus entered a €10 billion troika bailout programme in March 2013. So far, the government has been issued with €6.1 billion of the total.

Source: InCyprus

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