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Cyprus Gearing Up To Tap International Markets Following Upward Ratings Momentum

The Finance Ministry is considering tapping international capital markets, utilising the positive momentum generated after repetitive upgrades of Cyprus’ sovereign credit rating by international rating agencies.

Cyprus has enjoyed two upgrades by rating agencies Standard and Poor’s and Fitch to “BBB+” with a positive outlook in the last two weeks, while Moody’s has revised Cyprus’ outlook to positive while affirming its Baa2 rating. Since 2023 Cyrpus’ long-term credit rating has been upgraded to invest-grade status by all rating agencies.

Sources have told CNA that the aim of the market exit is a ten-year bond, noting however that issues like the maturity and final amount to be issued are determined in consultation with the issuance’s advisor (to be assigned by the Public Debt Management Office, PDMO) as well as the prevailing market conditions.

The PDMO said that Cyprus financing needs for 2024 amount to €1.4 billion, of which €1 billion will be secured by an issuance via the European Medium-Term Note programme.

Furthermore, the PDMO said in its annual report for 2023 that the aim for the next years is to issue bonds worth at least between €1 and €1.5 billion EMTN bonds annually, to secure the government’s annual financing needs.

The PDMO aims to smoothen Cyprus’ debt maturity curve, with longer maturity bonds, provided that the market conditions and the high-interest rate environment permit it.

The same source said the momentum for Cyprus, following the recent credit rating upgrades, is favourable.

Positive momentum is also created by the steadily declining trend in the debt-to-GDP ratio which is also favoured by Cyprus’ strong growth rate, which in the first quarter of 2024 amounted to 3.4% year on year, which was the third highest in the EU following Malta and Croatia, while in quarterly terms, Cyprus exhibited the second highest (1.2% seasonally adjusted) growth rate behind Malta.

Digital Transactions: A Green Approach To Finance In Cyprus

As Cyprus increasingly embraces digital transactions, the environmental benefits of this shift are becoming evident. A recent report highlights that digital payments significantly reduce the carbon footprint associated with traditional banking operations. By decreasing the reliance on physical branches, paper-based processes, and the transportation of cash, digital transactions are contributing to a more sustainable financial ecosystem. This transition is in line with global initiatives to combat climate change and underscores Cyprus’ commitment to promoting a cleaner, more efficient financial landscape.

Digital transactions are not only more convenient and efficient but also significantly less resource-intensive. Traditional banking often involves extensive paperwork, the use of physical infrastructure, and the transportation of money, all of which contribute to higher carbon emissions. In contrast, digital transactions streamline these processes, resulting in lower energy consumption and reduced waste.

The environmental advantages of digital transactions are complemented by their economic benefits. By lowering operational costs and enhancing transaction speed and security, digital payments provide a compelling case for broader adoption. This shift supports sustainable development goals and aligns with the global push towards greener, more resilient economies.

Furthermore, the widespread adoption of digital transactions in Cyprus is expected to drive innovation within the financial sector. With the integration of advanced technologies such as blockchain and artificial intelligence, the digital financial landscape is set to become even more efficient and secure. These innovations not only enhance user experience but also contribute to environmental sustainability by further reducing the need for physical resources.

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