articles | 20 January 2020

Cyprus Republic’s bonds investors from wider geographical spectrum

The Cyprus Republic’s recent double bond issuance has made clear that investors now come from a wider geographical spectrum and that fund managers and banks had expressed preference towards the highest-valued bonds, Phileleftheros reports.

Over 85% of the bids for both types of bonds came from investors outside Cyprus. The majority were from the United Kingdom (22.5%), Germany, Austria, Switzerland (15.5%), Cyprus 15%, 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%).

It is also clear that there is a steady interest in Cypriot bonds of this type from Greek investors, considering that their participation goes back to 2016. As for the category of investors, those who stand out are fund managers, banks/private banks and hedge funds.

Since Cyprus began its gradual return to capital markets back in 2014, investors’ interest in lending was there. But 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 Europe (excluding the United Kingdom) 23%, from the UK 45% and the rest of the world 8.5%.

The equity sector’s participation was dominant with about two-thirds of turnover coming from fund managers (51%), hedge funds (27%) and banks (22%). In 2015, Cyprus borrowed at an interest rate of 3.875% for a 7-year bond worth €1 billion.

And investors from Cyprus were only 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 2015, at the rate of 4.25%.

Investors from Cyprus accounted for 15.5% of the issuance, 61.5% from the United Kingdom, the rest of 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, Cyprus took advantage of the economy’s stable conditions and upgrades by DBRS and S&P credit rating agencies and 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.

Source: In-Cyprus

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