By George Psyllides
CYPRUS could return to the markets earlier than originally thought, according to Finance Minister Harris Georgiades who said it was a fully feasible objective given the way things were progressing.
“If we manage to regain access to the markets it will mean we have won the wager and will stand on our feet again,” he said during an interview on private Sigma Television on Wednesday evening.
“The objective is fully feasible at the rate things are going and we have started looking at the scenario of Cyprus returning to the markets earlier.”
Cyprus was shut out of international markets in May 2011 because of its oversized banks’ exposure to the Greek economy, and the lack of action to close fiscal gaps.
The administration at the time sought an international bailout around two years later after burning through a €2.5 billion loan from Russia.
The island was granted a €10 billion bailout in March 2013 with an adjustment period of three years.
It did not expect to attempt a return to international markets before 2016.
So far the island has passed all programme reviews with flying colours. In the most recent one Cyprus exceeded the targets set.
Last month its 10-year bonds were trading at an interest rate below the symbolically important 7.0 per cent threshold (the lower the better), the lowest since June 2011.
Average of 1 to 7-year bonds traded at a rate of 6.41 per cent on Thursday.
Bond yields spiked to 15.5 per cent in August 2012, dropped to 8.5 per cent in the beginning of March last year when Cyprus was ready to agree to a bailout but shot up to 15 per cent again after deposits were seized to recapitalise banks at the end of the same month.
Georgiades said the seizure, officially known as a bail-in although the term haircut has prevailed, dealt a serious blow to the credibility of the island’s banking system.
The minister said the government was not prepared for the consequences since there had not been a precedent in the eurozone.
A bill on bank resolutions had been prepared by the previous administration but was never sent to parliament.
“They delivered a 60-page bill that some people had ready in the drawers,” Georgiades said.