The issuance of a five-year bond was extremely successful for the Cypriot economy, as the Republic managed to collect the lowest interest rate ever achieved for bonds of this duration. Since yesterday's issue, bids amounting to 8 billion euros were received against 1 billion euros, so the issue was exceeded eight times, at a rate of 0.06%.
In a conversation we had with the associate professor of the Department of Accounting and Finance of the University of Cyprus Mr. George Nisiotis regarding the issuance of the five-year bond and the fact that the interest rate for its issuance amounted to only 0.06%, he told us that the low interest rate shows that the ECB measures help and contribute to maintaining low interest rates in the euro area. At the same time, Mr. Nisiotis explained that the fact of very low interest rates suggests that the markets translate the current pandemic crisis as something temporary and with the effectiveness of vaccines things will be much better. This, he said, is the essential difference with the debt crisis experienced by the eurozone a few years ago, where the uncertainty was much greater.
It is noted that the Minister of Finance Konstantinos Petridis characterized as extremely successful the issuance of the 5th bond amounting to 1 billion euros. In a written statement, Mr. Petridis pointed out that the issue raised “the lowest interest rate ever achieved in the Republic of Cyprus for a period of 5 years” and that the issue was exceeded eight times, after bids of 8 billion euros against 1 billion. euros which was the announced amount. “A fact that, in combination with the indicative performance, shows that in this difficult international economic situation, due to the pandemic, the international markets continue to show their confidence in the Cypriot economy and its policies”, says Mr. Petridis.
The minister also stressed that “at a time when the crisis has seriously affected much of economic activity, the issuance of this bond enhances liquidity to address the economic impact of the pandemic.” “The primary concern of the government was, and remains, to secure the necessary ammunition, which will allow us to support the welfare state and the health system until the economy recovers, while ensuring fiscal sustainability,” Petridis said in a statement. of.
It is recalled that in July 2020, the Republic of Cyprus proceeded with the supplementary issuance of two existing European bonds of 5-year and 20-year maturities, totaling 1 billion euros. The two bonds had a nominal interest rate of 0.625% and 1.25% with yields of 0.349% and 1.493% respectively. Finally, according to the latest data from the Public Debt Management Office, the debt of the central government at the end of the third quarter of 2020 reached 25.1 billion euros.