BUSINESS

Cyprus mulls tapping bond market by September

Cyprus is considering tapping the bond market by September, according to two government officials directly involved in the process.

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 euros 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-euro 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 euros in a sale of five-year notes to yield 4.85 percent.

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 Harris Georgiades said the country would issue new bonds once market conditions improve.

Cyprus was granted a 600-million-euro aid tranche on Monday, 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 euros in new capital by August 8, before euro-area bank stress tests.

[Bloomberg]

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