The debt was held by banks, most of it by co-operatives, and was maturing in July. The move was welcomed by the European Commission and the International Monetary Fund. The finance ministry said it was offering to exchange government bonds with a total nominal value of €1.0 billion, which matured during the adjustment period set by the island’s bailout programme, with five new bonds of equal interest rate (4.5 per cent to 5.0 per cent) and five to 10-year maturities. “This debt management exercise is in accordance with Cyprus’ commitments under the programme agreed with international partners and in line with the political agreement reached in the March 25, 2013 Eurogroup meeting,” a finance ministry statement said. The transaction did not aim at reducing public sector debt through private sector participation, the ministry added. “With this transaction, the full programme commitment of the Republic of Cyprus for a €1.0 billion long-term domestic refinancing is completed and no further action is required in this respect.”

The island’s international lenders welcomed the move. “The objective of this liability management operation is to facilitate cash-flow management for the government and to ensure adequate funding at terms that support long-term public debt sustainability, an essential step towards Cyprus’ economic recovery,” a statement from the EC and the IMF said. “The transaction is fully in line with the country’s previously announced commitment to roll over €1.0 billion of government debt held by domestic investors at existing coupon rates and extended maturities.” Once the transaction was completed, the refinancing commitment undertaken by the Cypriot authorities in support of the adjustment programme would be fulfilled. “We reiterate our commitment to stand by Cyprus in partnership and to support its return to growth and prosperity,” the EC and IMF said.

Source: Cyprus Mail