Cyprus issues 10-year Eurobond for 1 bln euros at 1 percent

Cyprus has issued a ten-year Eurobond for one billion euros (1.15 billion U.S. dollars) at an interest rate of one percent to beef up its liquidity in the face of a budget deficit caused by the coronavirus pandemic.

International bids totaling 7.8 billion euros pushed the interest down from a maximum 1.10 percent set by the Ministry of Finance.

“The bond aims at strengthening cash reserves, so as to meet the financial needs of the Republic (of Cyprus) both in terms of debt maturities and fiscal spending,” the Public Debt Management Office (PDMO) under the Ministry of Finance said.

The bond has been issued under the Euro Medium Term Note (EMTN) program. It is a flexible debt security maturing in five to ten years that is issued and traded outside of the United States.

The latest PDMO figures show that Cyprus’ debt maturities in 2022 amount to 1.92 billion euros.

After the debt repayment of 580 million euros in December 2021, the public debt of Cyprus is currently estimated at 24.3 billion euros or about 115.2 percent of its gross domestic product (GDP) of about 21.1 billion euros, an increase of 3.4 billion euros in relation to the 2019 debt level of 20.9 billion euros, or 95.1 percent of GDP.

The rise in the public debt was caused by borrowing in order to cover the spending of billions of euros in support programs for the business and employment sectors during the extended lockdowns imposed in 2020 and 2021 in an effort to stem the spread of COVID-19. ■