Cyprus, faced with soaring bond yields hovering around 14pc on the 10-year bond, and with its debt considered junk status by two of the world’s leading ratings firms, has few places to turn to cover its financing needs. Late last year, the country negotiated a €2.5bn (£2.02bn) bilateral loan from Russia. Now, Cyprus is in talks with China for another bilateral loan, of an undisclosed amount.
Greek ruins at the Paphos archaeological park, a Unesco World Heritage Site
The tiny country, with less than 1m population, joined the euro in 2008 and is heavily exposed to the Greek banks.
Mr Christofias said he wouldn’t rule out the possibility that the government may tap the European Union’s bail-out fund to recapitalise the island’s second-largest lender, Cyprus Popular Bank, which is the most heavily exposed to Greece.
“Certainly, I don’t take it as a given that we will negotiate our induction into the support mechanism. But I don’t want to exclude it entirely,” Christofias said.
Cyprus Popular, which sustained record losses after taking a 74pc write down on its Greek government bond holdings, is struggling to meet a June 30 deadline to replenish its capital reserves.
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