Cyprus billion-euro bond issue oversubscribed

(NICOSIA) - Cyprus's largest ever bond issue, to raise one billion, euros to help refinance its debt was subscribed fivefold, Finance Minister Charilaos Stavrakis announced on Wednesday.

"We are in the pleasant position to announce the book has successfully closed with pledges amounting to 5.5 billion euros, that's five times more than the target," Stavrakis told reporters in Nicosia.

"This is probably the biggest oversubscription of any European country for many months," he added.

Although the issue was originally for one billion euros, the final amount raised will be 1.5 billion euros (2.09 bln dollars), said the minister.

Large investment and commercial banks plus major insurance firms are among investors from 20 countries including Britain, the US and France who have bought bonds.

The money could have been raised at home but the government wanted to sell the Cyprus economy abroad and put it on the international investors map, Stavrakis said.

"We deliberately targeted foreign investors to bring new money to Cyprus and put fresh liquidity into the economy and banking system."

The country's first major foray on international markets since 2004 will refinance most of 1.9 billion euros of net debt the government has maturing this year.

Government roadshows in London and Paris last week attracted so much interest that planned trips to Frankfurt and Milan were deemed unnecessary.

"This shows we have earned the trust of major foreign investors who were impressed with our economy," said Stavrakis.

The minister said the money raised will also enable the government to bolster the social insurance fund.

Public debt was 49.4 percent of GDP last year, down from 59.4 percent in 2007 and latest projections have it falling further to 47.5 percent.

Lead managers of the issue were BNP Paribas, Royal Bank of Scotland and Societe Generale.