Cyprus Mail

Bond exchange completed

THE FINANCE ministry said on Monday it had completed the exchange of €1.0 billion in maturing domestic government bonds for new longer-term paper, easing the island’s debt commitments and setting it up for likely upgrades from rating agencies.

Five types of bonds with maturities ranging from six to 10 years were issued, offering the same coupons as the bonds they replaced, term sheets issued by the finance ministry said.

Authorities have said that the step, taken in agreement with international lenders, will ease the liquidity position of the financially troubled island, which agreed to a €10 billion aid package from the EU and the IMF in March.

The exchange will not be repeated with other government debt, a finance ministry official said.

The move to exchange existing debt with new longer-term paper prompted ratings agencies Standard and Poor’s and Fitch to temporarily downgrade Cyprus’ sovereign foreign currency rating to selective default and restricted default on June 28.

The ECB subsequently suspended the eligibility of Cyprus debt for use in its refinancing operations, likely a temporary move.

Both Fitch and S&P said they planned to raise their ratings after the completion of the debt exchange.


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