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Cyprus Daily Review – 7/7/2020

In the press today:

Cyprus taps the markets again – Aim is to write off more expensive debt

Cyprus said it will tap two existing bonds maturing in 2024 and 2040 for a minimum amount of €500m in a bid to replace more expensive debt expiring by end-2020 with cheaper debt. Cyprus rated BBB- (stable) by Standard and Poor`s, Ba2 (positive) by Moody’s, BBB- (stable) by Fitch and BBBL (stable) by DBRS, has mandated Citi, Deutsche Bank, Goldman Sachs International Bank and HSBC for a dual-tranche re-opening of the Republic’s existing bonds maturing on 3 December 2024 and 21 January 2040, with a minimum size of €250m  for each tranche. The transaction is expected to be launched in the near future subject to market conditions. FCA/ICMA stabilisation applies,” a market announcement issued said. This will be the second time the Ministry of Finance and its advisors have opted to reopen existing bonds hoping to yield around €750m. In September 2019, the Nicosia reopened existing bonds maturing in 2034 and 2049 securing €100m and €250m respectively. A Finance Ministry source said that a bond expires in December, held by Hellenic Bank (HB) with an interest rate close to 3%, while in April another €1.25b bond expires, which is short-term, specifically 12 months, and so they are seeking a more long-term debt maturity.

 

Ten credit institutions will participate in the Interest Rate Subsidy Scheme

The Finance Ministry yesterday announced the participation of 10 credit institutions in the Interest Rate Subsidy Scheme, with a total budget of €180m. These are: Ancoria Bank, AstroBank, Hellenic Bank, cdbbank, Societe Generale Bank, Bank of Cyprus (BoC), RCB Bank, Alpha Bank Cyprus, National Bank of Greece (Cyprus) and Eurobank. The ministry urged those who are interested to contact their banks and see if they can participate. The Scheme covers loans approved from 1 March 2020 until 31/12/2020 and which have to do with capital movement needs and/or investments within the Republic of Cyprus, with a maximum subsidised interest duration of four years. New loans that are the result of restructuring are not eligible to participate.

 

Banks: We are ready to borrow to viable businesses and households

The banks are ready to support businesses and households with liquidity during these difficult times. This was the main consensus among the Director of Corporate Banking at BoC, Xenios Konomis, Eurobank Cyprus’ head of Corporate and Investment Banking Nicolas Panagi and Hellenic Bank’s Head of Strategy Andreas Papadopoulos, during an online conference by Financial Media Way (FMW) entitled “Banks+Market+Businesses”. As the three bankers stressed, the top criterion for borrowing to businesses is their viability, which means they must not have NPLs and have the ability to repay their loans. At the moment, they said, the banks have strong liquidity and are ready to borrow to businesses and households. In fact, they said that they have their own schemes as well as those of the government, while they are expecting the regulations for the EU-guaranteed loans. The three bankers underlined that the banks are careful who they grant loans to, because they don’t want to face another crisis with NPLs. However, they clarified that they are ready to listen to each request from their customers and come up with the best financing solutions.

 

The 10 owners of Cyprus’ “red” loans

From the total €19.5b of NPLs in Cyprus, €9.4b are in the banking system and €10.1b are outside of the system. The biggest “owner” of NPLs is state asset management company KEDIPES, with €6.5b, followed by BoC with €3.7b (which is expected to reduce significantly what with the sale of the Helix 2 package of loans). It is noted that KEDIPES is also expected to record a drop in NPLs, after recently announcing that it will proceed with selling a loan package of €1.1b as soon as the conditions allow it. Gordian Holdings ranks in third place with NPLs totalling €2.6b, followed by HB with €2.3b.  But the amount is lower for HB, if two things are taken into consideration: first, that there are €480m that are guaranteed by the state, following the acquisition of the Co-op; and two, according to the bank’s recently-announced non-audited results, its NPLs total €1.3b. Alpha Bank Cyprus has €1.2b in NPLs; AstroBank (following the acquisition of USB) €600m; and National Bank of Greece (Cyprus) also €600m, which will not be moved to AstroBank once the deal between them is completed. B2Kapital has €200m, APS €200m, and the rest of the banks collectively €1b.

 

Laiki securities holder vindicated

In a letter to President Nicos Anastasiades, cardiologist Dr Nicolaos Pitsillides is requesting that the former keeps to his commitment to compensate him from the state, as a securities holder of legacy Laiki Bank, after he was vindicated in a final ruling by the Supreme Court. According to the letter, Pitsillides was also vindicated in the first instance ruling by Nicosia District Court in June 2018. The Supreme Court’s final ruling was issued on 24 June 2020, rejecting an appeal lodged by Laiki. The appeal was rejected because even though it was lodged on the final day of the deadline, the summons was served outside of the deadline. Furthermore, Laiki never requested an extension of the deadline.

 

BoC: “Housing Restart” with subsidised interest

Bank of Cyprus announced that as part of its effort to support the Cyprus economy and households, it is participating in the state’s Interest Rate Subsidy Scheme for new housing loans. It is offering new special housing loans under its “Housing Restart” scheme, which is in line with the government’s scheme and aims to simplify the procedures to grant loans.

 

Value of bounced cheques increases in June

There was a steep increase in the number and value of bounced cheques in June, according to the Central Bank of Cyprus. During the month, 47 blank cheques were issued, with a value of €142,793, compared with just nine the previous month, with a value of €13,008. Compared with the same month of 2019, the number of blank cheques actually dropped by 25%; however, their value recorded a 14% increase.

 

Disputing the data

The opposition parties yesterday objected to a bill that aims to improve the legal framework for asset management companies outside of the banking system and the strengthening of the secondary loans market. The main point of dispute was a provision that would enable asset management companies and non-credit institutions to keep the data relating to loans so they can use it as evidence in the event of court cases. The banks already apply this practice. Opposition MPs were not convinced by the explanations given by the Finance Ministry representative, who said the bill was necessary because it was difficult for these companies to prove there was a debt, as is the case with banks, and so there was an issue of unequal treatment.

 

5,000 clubs under dissolution

Around 5,000 clubs are on the brink of being dissolved, and have been given a last chance to submit their statutes in order to become registered on the Clubs Register within the next 30 days, or else be struck off. The news was revealed by Interior Minister Nicos Nouris yesterday, who told the House Interior Committee that Moneyval has referred to this issue before, and it would be making a fresh assessment of Cyprus soon and the government does not want the island downgraded further. He said it was a well-known fact that certain clubs are involved in dubious activities. Other clubs have loans that could turn non-performing if the clubs are dissolved, which also puts the banks at risk.

 

Inconvenience near the Limassol Port

A reader writes to Phileleftheros to complain about the dust produced by freight trucks, which are parked near their house near the Limassol Port in Zakaki. He also adds that the specific area is not connected to the sewerage system and the apartment buildings where they live don’t have a big capacity for waste and they regularly get full. He also notes that in their area, they have a big problem with rats and mosquitoes. The newspaper then contacted the Mayor of Limassol, Nicos Nicolaides who called on the reader to send a letter listing the problems they are facing so that they start the process with the involved state services, in order to start solving issues. He told the paper that “the problems the reader is referring to involve the authorities of the new port, SALA (Sewerage Board of Limassol) and the Public Health Services, the Ministry of Transport in terms of some infrastructure issues and perhaps other state services. A different process needs to be followed for each specific process, so that it is solved the soonest possible”. Referring to the problem that is created because of parking and moving cargo in the area, he said that “the relevant matter was discussed with the Ministry of Transport, but apparently hasn’t been solved and as such, the whole situation needs to be reassessed”. Phileleftheros’ author says that he believes that all the problems that the reader referred to, have to do with matters of health and safety and they must be tackled immediately as such, by the Municipality of Limassol as well as other state services which are involved, so that they can be solved as soon as possible.

 

Pilides: Image of Cyprus maritime sector has improved

At her end-of-term speech, the outgoing Deputy Shipping Minister spoke about how Cyprus’ image as a maritime centre has been upgraded, on the measures taken to enhance the competitiveness of the Cyprus shipping register and other achievements over these past 2.5 years. Speaking at a Press Conference about the work of the Deputy Ministry during her term, she said that they had the opportunity to promote Cyprus shipping with a more dynamic manner, expressing the conviction that they have made multiple steps forward. Initially, she said that they have completed rebranding and updating the logo. “Cyprus has a strong image in terms of its shipping sector, and this was very helpful in all our meetings with companies from around the world”, she said, noting that they have met with more than 300 companies over the past 2.5 years, with many delegations. Mrs Pilides also referred to keeping Cyprus’ competitiveness, saying that this was another area where they recorded good results, with the most important achievement being the successful renewal of the Tonnage Tax System until 2030. “Moreover, we simplified the shipping register policy, we abolished the initial registration fees for the shipping register, we made several changes for the competitiveness of our shipping register, which have given us a boost”, she added. She stressed that a great success for Cyprus’ image had been the re-election of the country to the Council of the Maritime Shipping Organisation, the only UN Council of which Cyprus is a member.

 

We must utilise our advantages for tourism

We want to fully utilise all advantages we have gained as a country in terms of the way we have dealt with the coronavirus for issues of tourism and connectivity, but always in line with the gradual opening said Minister of Transport, Communications and Works Yiannis Karousos. In statements on the occasion of the increase of countries allowed to fly to Cyprus, Karousos said that “we have essentially implemented the list approved by the EU about the number of third countries allowed to fly to the EU”.

 

Villas booming

Coastal holiday homes are booming with business in the free areas of Famagusta, as they have marked a significant increase in rentals from Cypriot visitors. This year’s tourist period is different due to the coronavirus crisis, and stakeholders of the area have stated that a large number of Cypriot travellers prefer to rent a holiday home and spent their weekend there with friends and family instead of booking a room at a hotel.

 

1878: Cyprus’ first casino hosted the “crème de la crème” of the Middle East

Cyprus’ first casino was located in the Kritou Terra village, in Paphos. It first opened its doors in 1878, and closed in the early 20th century. The casino was an attraction for many visitors, most of them Turks as well as the “crème de la crème” of the Middle East. The casino was a pioneering idea at the time, as it offered both gambling and a show, with girls dancing to entertain the patrons. The interior of the casino was decorated with many murals depicting various themes from the history and tradition of Cyprus. (The article also features a video)

 

Medicine prices will frequently change

Citizens have realised that the price of some medicines has changed, and as a result they are protesting that they are called to pay more for their pharmaceuticals. However, this is the practice within the GHS, since it is possible for their classification to change, based on the new additions to the catalogues approved by the HIO. According to the HIO officer Panayiotis Petrou, patients can get cheaper medicines of another company, which aren’t originator medicines. He also noted that in very few cases, non-original medicines are different from originators and that in limited cases, they may cause side-effects. He also clarified that if the doctor prescribes the original medicine and the patient insists on buying the specific medicine, then they will be charged with the price defined by the catalogue. However, an exception is allowed in the case where the personal doctor of the patient intervenes, by providing the relevant certificates. Petrou clarified that pharmacists are not responsible for the prices of medicines sold through the GHS.

 

Asthma and allergies more common in teens who stay up late

Teenagers who prefer to stay up late and wake later in the morning are more likely to suffer with asthma and allergies compared to those who sleep and wake earlier, according to a study. The study involved 1,684 adolescents, aged 13 or 14 years. They found that the chance of having asthma was around three times higher in teens who prefer to sleep later compared to those who preferred to sleep earlier. They also found the risk of suffering allergic rhinitis was twice as high in late-sleepers compared to early-sleepers.

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