On 9 March 2016 the Republic of Cyprus successfully exited the economic adjustment program that is has been under since March 2013 with overwhelming support of the creditors (IMF, EU, ECB) who praised the Republic for significant improvement of all areas of the economy, especially regarding public finances.
During the last year the Republic issued Eurobonds up to 2bn euros at favourable yields. Currently there are 4 government bonds outstanding in the euro market, with yields ranging from 2.20% to 3.80% approximately. These are the lowest yields the Republic has ever experienced and thus setting the path for new issues to be launched.
A point of interest for investors is the credit rating of these bonds which currently stand at B1 - positive outlook. It is our opinion this will be only short lived as rating agencies have shown intention on improving the rating in the near future as banking difficulties also are resolved.
Furthermore, Louis Clappas, in his capacity as the Honorary President of the Investment Firms Association, representing the Association is promoting in collaboration with Government’s Debt department at the Ministry of Finance, the issue of zero coupon bonds.
Full details of such issues have not yet been published, however it is anticipated that for a seven-year issue the total yield to maturity may be in the region of 4% tax free.
For more information please contact Louis Clappas at Lclappas@onepluscapital.net
or Alexandros Clappas at AClappas@onepluscapital.net