Cyprus Mail

PDMO exchanges maturing bonds worth €560m with new bond

The Public Debt Management Office (PDMO) said that it exchanged €560m worth of securities maturing in 2019 and 2020 with receipts from yesterday’s bond issue.

“There was strong demand from UK investors, who account for 35 per cent of the final allotment,” of the €850m 7-year bond issued on Tuesday at an average yield of 2.8 per cent, the PDMO, a division of the Finance Ministry, said in an emailed statement on Wednesday. Investors from Germany, Austria and Switzerland acquired a total of 9.7 per cent of the issue combined, from Italy 15.5 per cent, other European countries 13.5 per cent. Cypriot investors acquired 19.5 per cent of the bond issue.

The breakdown of investors showed that 32.8 per cent of the issue went to fund managers, 35.3 per cent to banks, 25 per cent to hedge funds, 5.1 per cent to pension and insurance funds and 1.8 per cent to central banks, the PDMO said.

Total subscription reached €4.2bn which was the highest since Cyprus’s international-market comeback in 2014, the PDMO said. It added that the bond issue had been announced on Monday at 15:10 pm Central European Time (CET) with a reference guideline of 3 per cent so as to give “investors time to study the transaction ahead of the execution the following day”.

The underwriters, Citi, Goldman Sachs International, and HSBC became recipients of “strong interest” both from holders of securities willing to exchange them with the new bond, and other investors, the PDMO said. Total subscriptions reached €1.9bn by Monday afternoon and when the book was opened the next day at 9:15 CET, the yield guideline fell to 2.9 per cent before subsiding further. The average sale price of the bond, which carries an annual interest rate of 2.75 per cent was 99,686 per cent.

The Cyprus Business Mail understands that the government will use the remaining receipts to repay €280m of the loan received from the International Monetary Fund.

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