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Cyprus says it is returning to markets a year earlier than planned

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(Globalpost/GlobalPost)

NICOSIA, June 7 (Xinhua) -- Cyprus will return to the markets in the immediate future, a year earlier than originally planned, Finance Minister Haris Georgiades said on Saturday.

"We contemplate this possibility and a decision will be made within days. We are working on the final details," Georgiades said.

He said the government plans issuing a 500-million-euro (about 680 million U.S. dollars) bond possibly maturing in five years.

He did not say what the interest would be but he said he expected it to be lower than a 6.5 percent interest on a 100-million-euro bond issued recently by private placement.

Cyprus was pulled back from the brink of default just over 15 months ago under a 10-billion-euro three-year long bailout program by the Eurogroup and the International Monetary Fund. It originally planned to return to the markets on a trial basis in the middle of 2015.

But Georgiades said that returning confidence in the Cypriot economy along with an increased international interest in investing in the economies of countries at the periphery have made the return to the markets possible earlier than originally thought.

He said the troika representing international lenders has been notified about the return to the markets and has given its approval.

Georgiades said there have been no additional needs for money as the economy is well on track and borrowing from the troika will continue on the lines of the bailout program.

But the money from the new bond will go towards lowering expensive internal loans obtained by the previous government in the two years preceding the bailout.

"The money will actually go to repay loans obtained from the banks and this means injecting fresh money in the economy which is faced with a shortage of liquidity," Georgiades explained.

Internal loans, which total 4.5 billion euros are not been repaid with bailout money.

Money from the planned bond will go towards part payment of an expensive 1.8 billion euros compound interest loan issued to recapitalize Cyprus Popular Bank, known as Laiki, when it came within a breath from bankruptcy in July, 2012.

Laiki was wound down by the troika nine months later in a resolution of the oversized Cypriot banking system, which also involved recapitalizing the island's primary bank by seizing depositors' money. (1 euro = 1.36 U.S. dollars)

http://www.globalpost.com/dispatch/news/xinhua-news-agency/140607/cyprus-says-it-returning-markets-year-earlier-planned