The Ministry of Finance is considering entering the markets soon to capitalize on the positive momentum in the Cypriot economy following successive credit rating upgrades, according to sources cited by the Cyprus News Agency.

According to informed sources, the goal is to issue a 10-year bond, with the final amount to be determined in consultation with the issuance advisors and depending on market conditions.

The Public Debt Management Office (PDMO) has already announced an annual financing program for this year amounting to €1.3 billion, of which €1 billion will be covered through the issuance of a European Medium-Term Note.

The PDMO stated in its 2023 annual report that it intends to issue at least one benchmark bond per year in the coming years, raising between €1.0-1.5 billion to meet the government's financing needs.

A consistent objective of the PDMO is to smooth the debt maturity profile, with an emphasis on issuing longer-term bonds, given the favorable market conditions and the new interest rate environment.

The same sources believe that the environment is favorable in the wake of upgrades by rating agencies Fitch and Standard & Poor's, which raised Cyprus's long-term credit rating to BBB+ with a positive outlook. Moody's also maintained a positive outlook, keeping the rating at BBB in a recent evaluation.

Additionally, positive conditions are driven by the steady decline in the debt-to-GDP ratio, mainly due to the growth rate, which was the second highest in the EU in the first quarter of the year on a quarterly basis (1.2%) and the third highest on an annual basis (3.4% seasonally adjusted) behind Malta and Croatia.

Initially, the market entry was planned for a few weeks ago, but statements by the leaders of France and Germany about the potential deployment of troops to Ukraine caused market turmoil, discouraging a potential international market entry at that time.