Cyprus Returns to Markets with Success

The first attempt of Cyprus to return to the international markets was crowned with success, following in the steps of Ireland, Portugal, and Greece. Cyprus issued on Wednesday a five-year bond of 750 million euros with an interest rate of 4.75%. It  was expected that the interest rate would be around 5.00-5.25%. Reuters said it opened with an official guidance of 4.90%, which is lower thanthe initial price estimates released on Tuesday and having dropped to 4.85%, eventually settled at 4.75%. The Cypriot Finance Minister Harris Georgiades said on Twitter: “It’s done. Cyprus has returned to the markets.” However, Cyprus’ growth prospects are still quite bleak as the country faces great challenges.  President Nicos Anastasiades pointed out that the bond’s success “should not make us relax our efforts towards reforms and revival of the economy. On the contrary, we are determined to continue with the corrective measures to reinstate our growth prospects.” Before the bond issue on Wednesday, Cyprus officials had held a series of meetings with investors in London to test the waters. In April, the Cypriot government had issued a €100m 6-year bond with an interest rate of 6.50% via private placement. The rating agency Standard & Poor’s upgraded the country’s credit rating to B, which still leaves Cyprus in the category of high risk investment. Last week, the yield of the 7-year Cypriot bond on the secondary market fell to a four-year low of 4.75%  and is currently below the 4.70% area, down from over 16.46% in June 2012.

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