Cypriot public debt rises sharply, but service is assured – Report
Cyprus has seen its public debt rise sharply in 2020, and even more in 2021, but the debt service plan is working.
According to a report by the Bureau of Public Debt Management released on Friday, public debt reached 24.8 billion euros, or 118% of GDP at the time. Currently, it is 36 billion euros, or 124% of GDP.
But servicing the debt is still not a challenge, according to the report. The cost of servicing debt has actually fallen since 2019.
The report notes that “the average cost of servicing public debt has reached an all-time low, which has benefited liability management transactions, the low interest rate environment in European financial markets and the economy. ‘improvement of the credit rating profile of the Republic of Cyprus. “
In addition, during the period January to December 2020, gross funding of over € 6 billion was secured, which more than doubled the existing stock of the cash buffer. the financing needs for at least the next nine months, while new prolonged borrowing is currently avoided, which means the containment of a further increase in public debt. “
“Despite the relatively large amount of public debt and the need for significant reduction, the debt repayment schedule is broken down to ensure its comfortable service, and debt maturity is at manageable levels and within. objectives set in the average – Debt management strategy for the years 2020-2022, ”explains the report.
Cyprus has a 5-year medium-term euro banknote program. “Market behavior indicated a disaggregation of the Twelve Benchmark Obligations (EMTNs) of the Republic of Cyprus into three main groups. The two longer-dated bonds maturing in 2034 and 2049, as well as the newly issued benchmark bonds maturing in 2040 and 2050, have moved similarly, tightened slightly and have performed well since April 2020, according to the report. .
The second group of bonds maturing 2028 and 2030 has also performed well in the secondary market since April 2020, with the year closing 44 and 58 basis points tighter than the start of the year and its launch, respectively.
The third group of bonds maturing in 2022, 2023, 2024, 2025 and 2027 moved in a similar fashion and towards the end of the year moved into negative territory and performed well as well.