UK investors lead the charge as offers flood in for Cyprus’ ESG bond

The Finance Ministry’s Public Debt Management Office on Thursday announced that the Republic of Cyprus’ newly issued ten-year Sustainable Fixed Rate Reference bond, amounting to €1 billion, garnered immense interest, with demand exceeding €12 billion.

As per the announcement, the 10-year bond has a repurchase spread set at +125 basis points above the mid-swaps reference price, which equals a repurchase yield of 4.219 per cent. It has a price difference (spread) of +189.6 basis points compared to DBR 2.3 per cent Feb-33. The annual nominal interest rate of the bond is 4.125 per cent.

“The performance of the issue is equivalent to the performance in the secondary market of the bonds, without any price increase, which combined with the very large size of the offer book, is an indication of the significant support from investors for the Republic of Cyprus and its sustainability objectives”, the office stated.

The bid book was closed with bids exceeding €12.1 billion, including the interest of the sponsoring banks amounting to €340 million.

“This constitutes the largest bid book secured by the Republic of Cyprus since its return to the markets in June 2014,” the announcement explained.

It also stated that it is the second-largest book of Sustainable Bond offers issued by a Eurozone country.

The underwriters of this issue were Barclays, HSBC, J.P. Morgan, Morgan Stanley and Societe Generale. In addition, HSBC and J.P. Morgan have also acted as consultants for the preparation of the Sustainable Bond Issuance Framework.

The bond in question will be listed on the London Stock Exchange in accordance with English Law using the EMTN program of the Republic of Cyprus.

Moreover, according to the office, Cyprus’ new benchmark bond attracted bids from a “particularly high-quality and diverse range of investors”.

Regarding the geographical distribution, 80 per cent of the offers came from international investors. Of these, the majority came from the United Kingdom.

In terms of the investor category, the majority of participants consisted of fund managers, as well as public and private banks.

The Public Debt Management Office stated that the Republic of Cyprus has placed sustainability at the centre of its national Recovery and Resilience Plan (2021-2026), with the main strategic objective of strengthening the resilience of the economy.

It also seeks to boost the country’s potential for economically, socially and environmentally sustainable long-term development and prosperity.

“The Republic of Cyprus intends to move towards sustainable lending through green, social and sustainable tools to complement the objectives of the Recovery and Resilience Plan,” the announcement concluded.