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Government considers €1bn bond issue in 2018

The Public Debt Management Office (PDMO) said Thursday the government may issue a euro medium-term note (EMTN), or Eurobond, of up to €1bn next year.

The security is expected to cover up to two-thirds of the government’s financing needs next year, estimated to reach up to €1.5bn, the PDMO said in a statement on its website.

Treasury bills will cover up to one-quarter of the financing needs while retail bonds and bilateral loans will cover up to 8 per cent of the government’s financing each, the PDMO said.

According to the PDMO’s debt repayment timetable, published in September 2017, debt maturities next year will reach €903m. The amount includes two instalments of €312.5m each towards repayment of the €2.5bn loan negotiated with Russia six years ago.

The government is expected to generate a fiscal surplus of around 1 per cent of economic output next year.

The last time the government issued an EMTN was in June, with a €850m 7-year bond at an average yield of 2.8 per cent, now traded on the secondary market for 2.75 per cent.

The total nominal value of outstanding Eurobonds at the end of September was €4.5bn, against a total government debt of €19.1bn. In November, the government paid back €614.9m to the Central Bank of Cyprus.

On Tuesday, the government said it had appointed Barclays Bank. Citi, Goldman Sachs International, HSBC, J. P. Morgan, Morgan Stanley and Société Générale Corporate & Investment Banking to help develop an “efficient” secondary market for Cypriot government securities.

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