Cyprus is weighing an early repayment for part of a 2.5 billion-euro Russian loan that dates back to the low point of the Mediterranean island’s financial crisis, after yields on the country’s 10-year debt hit a record low last week.
A Bloomberg report, citing reliable sources, said the government is seriously considering early repayment of the Russian loan. And this means that a new Cyprus bond will probably be issued within 2019. In addition to the 15th one, issued in February.
Cyprus agreed to the Russian loan in 2011, at a time when it was losing access to financial markets. The outstanding amount is currently at 1.57 billion euros, with its repayment period extended to 2021.
Nicosia is obliged to pay back a total of €715 million to the Russian government within 2019. In addition, another €1.4 billion of debt, concerning domestic bonds, must also be repaid within this year. Along with a five-year European loan which was issued in 2014 with an interest rate of 4.75%.
This would not be the first time that Cyprus opts for early repayment on debt. In July 2017 the government repaid almost one third of its loan from the IMF.
The loan from Russia was restructured in 2013 under the current administration of President Nicos Anastasiades, after the country secured a bail-out from international lenders and depositors at its two biggest lenders took a bail-in on their deposits.