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articles | 23 January 2020 | ServPRO Accountants & Consultants

Cyprus foreign bond investors come from a wide geographical spectrum

Cyprus’s latest double bond issuance has clearly shown that investors come from a wide geographical spectrum as over 85% of the bids for both types of bonds came from foreign investors.

The majority of those investors are fund managers, banks/private banks and hedge funds. As Cyprus newspaper “Phileleftheros” reports, fund managers and banks have expressed preference towards the highest-valued bonds.

The majority of bids from foreign investors came from the United Kingdom (22.5%), Germany, Austria, Switzerland (15.5%), Scandinavia (11.5%), France (6.5%), Greece (6%), Southern Europe (6.5%), rest of Europe (5%), northern Europe (4.5%), and rest of the world (7%). Since its gradual return to capital markets back in 2014, Cyprus attracted a lot of interest from investors. However, five years ago the cost was much higher and the 5-year bond interest rate stood at 4.75%. Lenders from Cyprus accounted for 14.5%, from the UK 45%, from Europe 23% and the rest of the world 8.5%.

In 2015, Cyprus borrowed at an interest rate of 3.875% for a 7-year bond worth €1 billion. Investors from Cyprus were just 1% of the issuance, 62% from the UK, 15% from Germany, Austria and Switzerland, 8.5% from Southern Europe, 4.5% from France/Benelux, 3% from the Middle East and Asia and 0.5% from the rest of Europe. There was also a 10-year bond issuance in the same year, at the rate of 4.25%. Investors from Cyprus accounted for 15.5% of the issuance, 61.5% from the United Kingdom, the Euro area 7.5%, Switzerland 3.5%, Scandinavian countries 2.5%, and offshore US 2.5%.

In 2016, Cyprus borrowed through a 7-year bond at an interest rate of 3.75%. Investors were from the UK 28%, US (offshore) 24%, rest of Europe 16%, Cyprus 14%, Germany/Austria 12%, Greece 5%, rest of the world 1%.

In 2017, due to the economy’s stable conditions and upgrades by credit rating agencies, Cyprus issued a new 7-year bond. The borrowing rate was 2.75%, and investors from the UK made up 35% of the final allocation.

The latest double bond issuance will meet Cyprus’ borrowing needs and has already re-paid an International Monetary Fund (IMF) rescue loan.

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