cyprus bond — cyprus bond — Cyprus secured record-breaking investor demand when it issued a €1 billion 10-year government bond on January 21, as confirmed by Finance Minister Makis Keravnos and data from the Public Debt Management Office.
The total offers for this bond reached an impressive €16.5 billion, a milestone that Keravnos described as historic. He stated, “The Republic of Cyprus asked for offers of €1 billion and received offers of €16.5 billion. This is a historic event.”
Keravnos noted that this level of interest from investors indicates a strong appetite for Cypriot bonds, marking a significant moment for the Republic. “For the first time there has been such strong appetite to invest in a bond of the Republic of Cyprus,” he said.
The bond issuance was also notable for its low interest rate of 3.25 per cent, which is the lowest among recent sovereign issues, according to the minister. He drew comparisons with recent bond issuances from Greece and Portugal, highlighting that Cyprus secured the most favourable pricing in the region.
Keravnos attributed this success to the government’s sound economic policies, which he believes create conditions of economic stability and security for investors. He reiterated the government’s commitment to maintaining this policy direction, which he claims will facilitate future growth and yield positive societal outcomes.
The Finance Minister clarified that the bond issuance does not represent additional debt but rather the replacement of maturing debt. He pointed out that Cyprus has successfully reduced its public debt to around 55 per cent of GDP, surpassing its target of 60 per cent set for the end of the year.
This achievement is expected to allow for increased spending on development projects and social policy initiatives. The Public Debt Management Office reported that approximately 80 per cent of total demand for the bond came from international investors, showcasing a robust interest from abroad.
The bond issuance was the first syndicated transaction since Cyprus regained an ‘A’ credit rating from major rating agencies. The majority of the demand came from foreign investors, with the UK leading the way at 43.5 per cent. Other significant contributions included Scandinavian countries at 14 per cent and Portugal at 9.7 per cent.
In terms of investor types, asset managers accounted for 53.8 per cent of participation, followed by banks at 25.8 per cent and insurance and pension funds at 8.1 per cent. Central banks and official institutions made up the remaining 7.8 per cent.
The bond was priced at mid-swaps plus 44 basis points, resulting in a reoffer yield of 3.339 per cent. The transaction was led by notable financial institutions such as Barclays, J.P. Morgan, Morgan Stanley, and Société Générale, with the Bank of Cyprus serving as co-manager.
This new bond will be listed on the London Stock Exchange under the Republic of Cyprus EMTN programme. Looking ahead, the Public Debt Management Office indicated plans to return to the market with another 10-year benchmark bond maturing in January 2036, depending on market conditions.
The issuance process started on January 20, with Cyprus officially opening the order book for the new bond at 08:27 London time the following day. Initial pricing thoughts indicated a spread of mid-swaps plus 52 basis points, and the bond attracted strong interest from the outset.
By 10:00 London time, the order book had surpassed €14.5 billion, prompting a revision of price guidance to mid-swaps plus 47 basis points. The momentum continued, allowing Cyprus to tighten the spread further to mid-swaps plus 44 basis points.
The final order book closed with total demand exceeding €16.4 billion, marking the largest order book achieved by Cyprus in a syndicated transaction, surpassing the previous record set in 2023 with the Sustainable Bond.
As of 13:50 London time, the bond was officially priced, demonstrating the solid support from the international investment community for Cyprus. The high-quality demand is seen as a testament to the nation’s robust economic fundamentals and positive credit trajectory.
