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Bank of Cyprus places €300mn bond

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Bank of Cyprus announced on Thursday that it has successfully completed the issuance and sale of a €300 million high-priority bond through its European Medium-Term Bond Loan Program (EMTN Program), the bank said in a statement on Thursday.

Officially issued in combination with the bank’s holding, this is a programme that maintains regular issuance throughout a given period.

The transaction is the first issue of the Group in terms of high repayment bonds eligible for the Minimum Equity and Eligible Liabilities (MREL), laying the foundations for similar future issues, the statement said.

The bond was issued at face value and has an annual interest rate of 2.50 per cent, which is a generous spread over the comparable Bund – the bank was able to reduce the final pricing by 25 basis points due to high demand, the statement said.

The issue was oversubscribed, attracting interest from about 65 institutional investors, and the final bid book was more than doubled. with the final pricing being 25 basis points lower than the original pricing indication, according to the statement.

The notes are expected to comply with the criteria for the minimum requirement for own funds and eligible liabilities (MREL) – this is a form of reserve capital — and to contribute towards the bank’s MREL requirements. This transaction improves Bank of Cyprus’ MREL ratio to 18.37 per cent of risk-weighted assets (RWA) and to 10.62 per cent of Leverage Ratio Exposure (LRE), in each case comfortably above the interim requirements of 14.94 per cent of RWA and 5.91 per cent of LRE which the bank must meet by 1 January 1, 2022.

“The bank that the success of the transaction, in terms of investor participation and final pricing, reflect market recognition of the significant progress made by the bank in improving its financial profile, as well as confidence in the Cypriot economy. It concluded that this transaction represents its inaugural issuance of MREL-compliant senior notes, establishing a blueprint for future issuances,” the statement said.

BofA Securities, Citigroup, HSBC and Nomura acted as Joint Lead Managers. Stifel Nicolaus
Europe Limited and Bank of Cyprus acted as Co-Managers. Sidley Austin LLP acted as English
legal advisors and Chryssafinis & Polyviou LLC acted as Cypriot legal advisors to the bank in this transaction.

The transaction follows the successful issuance of a subordinated bond with reduced collateral in April 2021 by BOC Holdings.

Settlement is expected to take place on June 24, 2021. The Bond will be listed on the Euro MTF market of the Luxembourg Stock Exchange.

The success of the transaction, in terms of investor participation and final pricing, demonstrates the recognition by the markets of the significant progress that the Group has achieved in improving its financial profile, as well as the confidence of institutional investors in the Cypriot economy.

BofA Securities, Citigroup, HSBC and Nomura and co-organized the Joint Lead Managers. Stifel Nicolaus Europe Limited and the Bank acted as Co-Managers.

Sidley Austin LLP acted as the Bank’s legal advisor under English law and Chrysafinis and Polyviou DEPE as the Bank’s legal advisors under Cypriot law in this transaction.

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