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12° Nicosia,
27 April, 2024
 

Cyprus embraces global investment with its bond market debut

Insights into Cyprus' launch of a billion-euro bond offering to global investors

Newsroom

In April 2024, the Republic of Cyprus is gearing up to enter the international bond markets, intending to issue a Euro Medium Term Note (EMTN) bond worth 1 billion euros. According to Kathimerini reporter, Panayiotis Rougalas, the Ministry of Finance is in the process of appointing a consultant for the bond issue, aiming to execute it within the month. The bond's duration is yet to be finalized, likely falling between 5 to 10 years, aligning with the 2024 annual financing program.

Contrary to expectations, the 2024 bond will not be a sustainability (green) bond, unlike the successful issuance of Cyprus' first Environmental, Social, and Governance (ESG) bond in April 2023, which garnered significant investor interest, exceeding €12 billion in bids.

Cyprus' public debt reached €23 billion in January 2024, with a debt-to-GDP ratio of 77.3%. However, debt service for 2024 is forecasted to increase by 90% compared to 2023, driven by the maturity of previous loans.

In the fiscal domain, primary public expenditure growth for 2024 is estimated at 5.8%, with subsequent years projected to see growth rates of 4% and 4.3% for 2025 and 2026, respectively. The medium-term economic outlook for 2024-2026 remains positive, with expected growth rates of around 3% annually. Factors contributing to this optimism include a recovery in domestic and external demand, an influx of foreign companies, particularly in the ICT sector, and a rebound in tourism receipts. Inflation is anticipated to decrease to 2.5% in 2024, with subsequent years estimated at 2%, while the unemployment rate is expected to decline to 5.8% in 2024, further decreasing to 5% by 2026.

Based on Ministry of Finance projections, the fiscal balance for 2024 is expected to yield a surplus of EUR 714 million, equivalent to 2.3% of GDP, indicating an improvement from the previous year. This trend is expected to continue into 2025 and 2026, with fiscal balances projected to remain at 2.3% and 2.4% of GDP, respectively. Additionally, public revenues are forecasted to increase by 6.8% in 2024 due to changes in social insurance contribution rates, with growth rates of 4.3% anticipated for subsequent years.

[This article was translated and summarized from its Greek original]

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Cyprus  |  banks  |  economy  |  bonds

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