* Cyprus eyes post-bailout bond debut for 500 mln -finmin
* EU island state teetered on verge of bankruptcy a year ago
* Bond issue could be swiftest for post-bailout nation
By Michele Kambas
NICOSIA, June 10 Cyprus appointed lead managers
on Tuesday to arrange its first post-bailout bond, underpinning
its ambitions for a swift comeback to international markets just
a year after teetering on the verge of bankruptcy.
The Cypriot finance ministry said it had mandated Deutsche
Bank, Goldman Sachs International, HSBC, UBS Investment Bank and
VTB Capital to handle briefings for investors. A
euro-denominated transaction may follow, subject to market
conditions, the finance ministry said.
Last week's easing measures by the European Central Bank
have given fresh impetus to a two-year euro zone debt rally that
has driven borrowing costs in countries that were engulfed in
the sovereign debt crisis to record lows.
A senior finance ministry source told Reuters that
authorities were contemplating raising up to 500 million euros
($680.75 million) but that the final figure, timing and maturity
of the issue would be made after consulting lead managers.
The source could not rule out an issue as early as this
"This should not in any way be interpreted as a premature
termination of the (economic) adjustment programme. We intend to
continue that with the same determination," the source said,
referring to a fiscal consolidation programme being monitored by
the International Monetary Fund and European Union.
Lenders extended a 10 billion euro financial lifeline to
Cyprus in March 2013, when its banking system imploded from
excessive exposure to Greece, and its fiscal system was crippled
by non-access to international markets.
If Cyprus makes a successful return to markets, it would be
the swiftest turnaround of a distressed nation after a bailout.
Cyprus raised 100 million euros ($136.15 million) in a
6-year, privately-placed bond issued on April 30, bearing a
coupon of 6.5 percent. It was issued under its European Medium
Term Note (EMTN) programme, which has a 9 billion euro ceiling.
The source said any funds raised from the market would not
substitute for bailout funds. "Any funds would be used as part
of the management of existing public debt, not covered by the
financial envelope of the troika."
Cyprus has not appeared on international markets since at
least May 2011, when high yields on its existing benchmark bonds
made external borrowing impossible.
Under an economic adjustment plan, Cyprus was not seen
returning to financial markets until the end of 2015 at the
But the island republic has constantly outperformed
expectations since the bailout, thanks to robust consumer
spending and tourism. As a result, lenders have frequently
adjusted their economic outlook to reflect a shallower recession
than initially anticipated.
Cypriot economic output is now expected to contract by 4.2
percent in 2014, less than initial expectations of 4.8 percent.
On Tuesday, Sapienta, an economic consultancy, said it expected
the final decline in output to be 3.1 percent.
"The decline has really bottomed out," said Sapienta
director Fiona Mullen.
($1 = 0.7345 Euros)
(Editing by Mark Heinrich)