Cyprus returned to international markets on Wednesday after raising 750 million euros (US$1.02 billion) with its first public issue of bonds since last year’s bailout saved it from bankruptcy.
An initial target of 500 million euros was oversubscribed four times, and allowed authorities to raise an extra 250 million euros through the five-year bonds, the Cypriot Ministry of Finance said.
The bonds carried a 4.75 percent interest rate in an issuance that comes a year earlier than initially anticipated.
Finance and economic authorities hailed the unexpectedly strong issuance as a sign that the east Mediterranean island nation is starting to regain its economic footing.
REGAINING TRUST
“Trust in the Cypriot economy and its prospects has been confirmed in a tangible way,” Cypriot Minister of Finance Harris Georgiades told reporters, adding that the money will help pay down the country’s debt — now at 118 percent of GDP — and inject needed liquidity into banks.
In March last year, Cyprus received a 10 billion euro rescue negotiated with other eurozone countries and the IMF, including terms that crushed its banking sector by sanctioning the seizure of uninsured deposits in the country’s two largest banks, which plunged the nation’s economy into a sharp recession.
ONGOING REFORM
Georgiades said that the government will not let up on its economic reform drive, saying that sticking to the bailout’s terms had helped the country regain investor confidence.
The reforms included consolidation in the bank sector, shrinking an oversized public sector and privatizing state-owned companies.
Cyprus has fared better than expected with a shallower recession than early projections had indicated.
It has also received four straight positive reviews from its creditors of its rescue program and has earned its first credit-rating upgrades after years, although it remains deep in junk territory.
However, the country is not out of the woods yet. Unemployment stands at around 17 percent.
Additionally, its wobbly banking sector is still weighed down by a large number of bad loans resulting in a credit crunch that stifles growth.
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