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12° Nicosia,
23 September, 2020
 

Cyprus eyes 10-year low yield bond after S&P lifts sovereign to investment grade

Cypriot bond yields fall after S&P lifts sovereign to investment grade

With Cyprus’s credit worthiness back to investment grade Finance Minister Haris Georgiadis has a lot to smile about. S&P late on Friday lifted Cyprus’s rating to BBB- from BB+, citing brighter growth prospects and consolidation in the banking sector.

 "We have achieved one of the main goals of our economic policy" said Mr. Georgiades referring to the upgrade by Standard & Poor's yesterday. "The investment grade rating is surely shielding our country, boosting growth prospects and sending a positive message internationally," he said.

"It essentially closes a cycle and justifies the efforts of our fellow citizens. The difficult decisions we were called upon to make and in particular the decisions on the Cyprus Cooperative Bank are one of the main reason for the upgrade, "he said.

The yield on the five year Cypriot government bond fell as low as 0.826 percent

He also said that "in politics we must be ready to make such decisions that ultimately serve the public interest, focusing on the essence rather than on the image".

We must, of course, continue the effort and continue to set such high goals that we must consistently meet, he concluded.

Cyprus is expected to issue a European EMTN bond as soon as today 17 of September according to Kathimerini. The EMTN bond expected to be issued by the Republic of Cyprus will be at € 1 billion and will refinance debt that expires in the same year. It may not proceed to a larger debt issue, but the Ministry has already announced that in case of a larger issue, the extra funds to be raised will be used to strengthen the cash reserve.

The Cypriot economy has been growing for four consecutive years. For 2018, growth is expected to reach 4% of GDP, while unemployment is now below the eurozone average and is at 7.3%. The positive course of the economy is projected to continue with growth rate for 2019 estimated at 3.8%. Public debt for 2018 is estimated at 104.2% of GDP while for 2019 it is limited to 99.5% of GDP. By 2019 the first proceeds from the Cyprus Asset Management Company, the profitable part of the former Cypriot Cooperative Bank are expected to strenghten the state's liquidity and the sustainability of public debt.

Cypriot bond yields fall after S&P lifts sovereign to investment grade

Government bond yields in Cyprus fell to their lowest since late March on Monday morning, following a decision by S&P Global to lift the country’s credit rating to investment grade territory. That upgrade makes Cyprus eligible for ECB bond purchases. 

The yield on the five-year Cypriot government bond fell as low as 0.826 percent, its lowest level since late March. It was last down 27 bps at 0.95 percent, Reuters reports.

Yields on seven-year bonds also fell to their lowest since March.The country on Monday mandated Barclays, J.P. Morgan, Morgan Stanley and Societe Generale to sell a 10-year government bond in a move analysts said was aimed at taking advantage of the positive sentiment following the upgrade.

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