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Roundup: Bailed-out Cyprus raises 1 bln euros at 4 pct yield

Xinhua, April 29, 2015 Adjust font size:

Bailed-out Cyprus on Tuesday raised 1 billion euros (1.09 billion U.S. dollars) from international markets, providing tangible evidence of its economic recovery two years after being pulled back from the brink of bankruptcy.

Finance Minister Harris Georgiades said offers totaling 1.9 billion euros were made and Cyprus sold seven-year bonds worth 1 billion euros at a nominal interest of 3.87 percent and a yield of 4 percent.

"I consider that this is a development which proves the restoration of confidence in the Cypriot economy among international investors. It shows that their assessments of the Cypriot economy are positive," Georgiades told reporters at the end of the bond sale.

He said the money will mostly go towards repaying more expensive internal loans.

Georgiades added that this will lead to strengthening internal liquidity and less borrowing from the European Stability Mechanism and the International Monetary Fund (IMF).

Cyprus was offered 10 billion euros of financial assistance by the Eurogroup and the IMF in March 2013, after being shut out of international markets since 2011.

Cyprus has drawn about half of that amount in the first two years of a three-year economic adjustment program which ends in 10 months.

Georgiades confirmed an assessment by Fitch Ratings Agency that Cyprus will not draw the entire bailout amount.

"This is because the Cypriot banks have been recapitalized adequately and will not need further state assistance and also because the budget deficit has shrank," he added.

But he dismissed as suggestion that the next time Cyprus raises financing from the markets will make a Greek-style stands and will "drive-out the troika" -- the teams of technocrats representing the European Commission, the European Central Bank (ECB) and the IMF.

"I do not like this kind of rhetoric. I am inclined on making practical moves which will finally allow the Cypriot economy to operate without having to depend on support, which it presently needs," Georgiades said.

Teams of troika technocrats are currently making a close examination of insolvency legislation recently passed by the Cypriot parliament and are trawling the banking system.

A positive evaluation of Cyprus progress in applying its economic adjustment program will allow the ECB to buy Cypriot bonds worth up to 500 million euros under its liquidity program. (1 euro = 1.09 U.S. dollars) Endit