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Roundup: Cyprus plans to tap int'l markets by Nov. 15

Xinhua, October 23, 2015 Adjust font size:

The Cypriot government plans to raise a loan of between 750 million euros and 1 billion euros by Nov. 15, the state radio and the state-run Cyprus News Agency reported on Thursday.

A source quoted by the state radio said a definite decision will be made after a Fitch rating agency upgrade of Cyprus' creditworthiness expected on Friday.

The sources said Fitch is expected to raise the eastern Mediterranean island's credit rating to BB- from B-.

Cyprus News Agency quoted a competent source at the Ministry of Finance as saying that Cyprus will issue a European medium-term bond of a 7.5 to 10 years of duration.

"This will be the first time since the economic crisis Cyprus will borrow from the primary market through the sale of a European bond," the source said.

Cyprus received a 10-billion-euro bailout from the Eurogroup and the International Monetary Fund in March 2013, after being shut out of international markets since mid-2011, to overcome an acute fiscal crisis and to recapitalize its banks, which lost heavily when the Greek debt was written-down by about 73 percent.

The source said the amount raised will be used to strengthen the government's liquidity and to repay more expensive loans.

"The objective is to ensure the early coverage of the financial needs of the Republic at the lowest possible cost in the medium term, within an acceptable level of risk," the source said.

The source added that this is part of the main objective of the medium term public term management strategy for 2015 to 2019.

The government has a significant reserve liquidity of 2 billion euros or 11 percent of GDP (gross domestic product) and will use part of it to repay a European Medium Term bond of 1 billion euros maturing on Nov. 1, according to the same source.

The moves are part of the government's plans for a "clean exit" from its bailout memorandum next March, meaning that it will not finance its needs with bailout money, said the source.

Cyprus will absorb 600 million euros at the end of its program in March 2016, raising its total lending by international lenders to 7.7 billion euros.

"The remaining 2.3 billion euros of the loan program will not be used," said the source.

Troika technocrats representing the European Commission, the European Central Bank and the International Monetary Fund will visit Cyprus in November for their last review of the economy. Endit