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Wednesday, May 22, 2024

Bank of Cyprus: First green bond and achievement of the MREL target

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The Bond was issued at its nominal value and bears an annual fixed interest rate of 5%

Τραπζα Κyπροο πρασ νοοκοεοο ;υ MREL

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The Bank of Cyprus proceeded with the first issuance of a high priority green bond, amounting to €300 million, achieving at the same time its compliance with the final minimum requirement of Equity and Eligible Liabilities MREL amounting to 25% of the weighted of its assets, a target it had to comply with by the end of the year.

As stated in the bank's announcement, the Bond was issued at its nominal value and bears an annual fixed interest rate of 5% which will be paid annually retroactively until the Early Redemption Date on May 2, 2028. The Bond expires on May 2, 2029, however the Bank has the right to early redemption on the Early Redemption Date, provided certain conditions are met.

It is even noted that the issue attracted the interest of more than 120 institutional investors, with the offer book having been oversubscribed more than 4 times and amounting to €1.3 billion and with the final pricing being by 50 bp. lower than the original pricing indication.

“The transaction represents the Bank's first green bond issuance in line with the Group's 'Beyond Banking' philosophy to create a stronger, safer Bank, focused on the future as well as leading Cyprus' transition to a sustainable future”, it states.

It is also noted that the net proceeds from the issuance of the bond will be allocated to Eligible Green Financing Projects as described in the Bank's Sustainable Financing Framework, which include Green Buildings, Energy Efficiency Improvement, Environmentally Friendly Transportation and Renewable Energy Sources.

“The success of the transaction, in terms of investor participation and final pricing, represents another milestone in the markets' recognition of the Group's strong financial profile,” it said.

MREL target reached

Furthermore, the bank announced that the bond is expected to meet the Minimum Requirement for Equity and Eligible Liabilities ('MREL' ) thereby contributing to the Bank's MREL requirements.

The transaction improves the bank's Minimum Requirement, MREL ratio to 28.36% of weighted assets and to 12.73% of the leverage ratio total exposure (LRE) measure, “achieving compliance and adequate provisioning with respect to the final Minimum MREL Requirement of 25% of weighted assets and 5.91% of the total exposure measure leverage ratio, with which the Bank must comply by 31 December 2024, it states.

Source: www.kathimerini.com.cy

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