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85% of the investors in the Cyprus Bond were not Cypriots

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85% of the investors in the Cyprus Bond were not Cypriots

Only 15% of investors for the new five-year bond of the Republic of Cyprus were Cypriots based on the announcement of the Public Debt Management Office.

Specifically, the new reference bond of Cyprus attracted offers from a very high quality and diversified range of investors. Regarding the geographical distribution, 85% of the bids for came from investors outside Cyprus, the majority of which were from the United Kingdom and the Scandinavian countries.

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In terms of investor category, the majority of participants were fund managers, followed by banks / private banks as well as central banks / government agencies.

85% of the investors in the Cyprus Bond were not Cypriots

The process of issuing the Bond

The Republic of Cyprus officially announced the issuance of a new 5-year benchmark bond at 11:00 London time on Monday, February 1, 2021, and that its pricing was expected in the near future depending on market conditions.

At 8:10 London time on Tuesday morning, February 2, 2021, the book of offers was officially opened and the initial guide price for the new 5-year bond was announced at around +60 basis points above the mid-swaps reference price. At the same time, it was announced that the amount of the transaction was set at € 1.0 billion, with the commitment that it will not increase further.

The transaction attracted strong interest from investors and at 9:46 London time, with the book of offers over € 7.5 billion, the guide price was revised in the range + 50-55 basis points above the mid-swaps reference price.

Later in the morning at 10:45 London time, with the book of offers now over € 8.5 billion, the quality of the offers allowed the final repurchase spread to be further reduced and set at +48 points. Shortly afterwards, the book of offers closed at 11.00 London time with offers over € 7.45 billion.

However, at the top of € 8.5 billion. represents the largest book of offers achieved by the Republic of Cyprus in the issuance of a single bond using the consortium method since the country's return to international capital markets in 2014.

At 14:37 London time, the new 5-year bond amounting to € 1.0 billion. was officially priced at +48 basis points above the mid-swaps reference price, which equates to a repurchase yield of 0.053% and a spread of +78.2 basis points against the DBR 0.5% Feb-26. This benchmark bond was priced at the lowest repurchase yield and the lowest nominal interest rate (0%) ever achieved by the Republic of Cyprus using the consortium method.

Prior to the announcement of this transaction, the theoretical fair value of a 5-year bond for the Republic of Cyprus was calculated by the contractor group at around +50 basis points above the mid-swaps reference price. In this case, the transaction was invoiced with a negative increase (“premium”) against the curve of the Republic of Cyprus in the secondary market.

Source: www.philenews.com

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