Cyprus to repay Russian loan early

Cyprus is considering the issuance of a new bond to repay part of the Russian loan.  Back in 2011 Cyprus sought Russian assistance at a time when it had no access to financial markets, as Demetris Christofias's government was trying to avoid requesting a bailout from the EU and the IMF. 

During a meeting today between Finance Minister Haris Georgiades and the new Governor of the Central Bank Constantinos Erodotou, Georgiades mentioned that Cyprus is considering a new bond in order to repay the Russian loan and that relevant statements will follow soon when the move will be finalized.

"It is a fact that the data on the Cypriot economy in international markets is extremely positive and this creates some opportunities that we evaluate and will not hesitate to capitalize on. The main purpose is to carry out moves that further shield the Cypriot economy, taking advantage of the progress that has been made, the positive image that has now been created for our country" said the Finance Minister.

Georgiades did not specify whether this would be a domestic bond issuance or a European one. Mr Georgiades reiterated that "we are looking into the possibility and I will be able to make announcements very soon". 

This would not be the first time that Cyprus opts for early debt repayment. In July 2017 the government repaid almost one third of its IMF  loan.

The Russian loan stands today at 1.57 billion euros and holds an interest rate of 2.5%. 

Bloomberg reported yesterday that current market conditions have prompted Cyprus to weigh selling new debt earlier than originally planned as yields on the Cypriot 10-year bond have dropped to 1.37%, the lowest rate since 2015, when Bloomberg began compiling data.