NICOSIA - In sharp contrast to Greece, still unable to return to the markets, Cyprus raised 1.5 billion euros ($1.75 billion) on Sept. 18 in the sale of 10-year bonds after the rating agency Standard & Poor’s upgraded its status out of junk bond territory.
Demand hit 5.5 billion euros ($6.43 billion) at an interest rate of 2.4 percent, below the expected 2.6 percent, another divided for the country which continues to come back from the near-collapse of banks in 2013.
They were almost brought down by big holdings in Greek bonds devalued 74 percent and bad loans given to Greek businesses during that country’s enduring economic crisis which has kept on despite 326 billion euros ($381.4 billion) in three bailouts that began in 2010.
Those expired on Aug. 20 but Greece’s ruling Radical Left SYRIZA government of Prime Minister Alexis Tsipras, who reneged on anti-austerity promises to get a third rescue package in the summer of 2015, for 86 billion euros ($100.61 billion), is relying on a cash buffer to keep operating until the climate for Greek bonds gets better.
Greece’s growth rate is expected to be 2 percent this year, a figure some analysts said is still likely unattainable as Tsipras is seeking to wiggle out of more pension cuts he promised and cut taxes he raised in a bid to restore popularity with elections required to be held by October, 2019.
Cyprus has expanded 4 percent after a 10 billion euro ($11.7 billion) bailout from international lenders ended in 2016, aided by President Nicos Anastasiades reneging on pledges and allowing banks to confiscate 47.5 percent of bank accounts over 100,000 euros, ($116,994), cutting deep into the life savings of many residents and hurting small business.
He also broke his word to hold bank executives accountable, letting them escape, and to return some monies to account holders when the economy recovered, letting banks keep their confiscated.
Greece is barred from the European Central Bank’s bond-buying program, unlike Cyprus, which has access. Greece’s bonds remain ineligible as collateral for cheap ECB credit for Greek banks. Tsipras said it make take three years for Greek bonds to be elevated from the junk bond category although he keeps wooing investors despite an avalanche of tax hikes that put the corporate rate at 29 percent.