UK investors are leading the charge as offers for Cyprus' ESG bond come in

The Public Debt Management Office of the Finance Ministry said on Thursday that the Republic of Cyprus' recently issued ten-year Sustainable Fixed Rate Reference bond, worth €1 billion, drew enormous interest, with demand exceeding €12 billion.

According to the release, the 10-year bond has a repurchase spread of +125 basis points above the mid-swaps reference price, resulting in a 4.219 percent repurchase yield. It has a price differential (spread) of +189.6 basis points versus DBR 2.3 percent from February to March. The bond's yearly nominal interest rate is 4.125 percent.

“The performance of the issue is equivalent to the performance in the secondary market of the bonds, without any price increase, which combined with the very large size of the offer book, is an indication of the significant support from investors for the Republic of Cyprus and its sustainability objectives”, the office stated.

The offer book was closed with bids reaching €12.1 billion, including the sponsoring banks' interest of €340 million.

"This represents the Republic of Cyprus's largest bid book secured since its return to the markets in June 2014," according to the release.

It also asserted that it is the Eurozone country with the second-largest book of Sustainable Bond offers.

This issuance was underwritten by Barclays, HSBC, J.P. Morgan, Morgan Stanley, and Societe Generale. Furthermore, HSBC and J.P. Morgan served as advisors in the development of the Sustainable Bond Issuance Framework.

The bond in question will be listed on the London Stock Exchange in compliance with English law, through the Republic of Cyprus's EMTN programme.

Furthermore, the office reports that Cyprus' new benchmark bond drew bids from a "particularly high-quality and diverse range of investors."

In terms of geographical distribution, overseas investors made up 80% of the proposals. The majority of these were from the United Kingdom.

The bulk of participants in the investor category were fund managers, as well as public and private banks.

According to the Public Debt Management Office, the Republic of Cyprus has prioritised sustainability in its national Recovery and Resilience Plan (2021-2026), with the primary strategic goal of enhancing the economy's resilience.

It also aims to increase the country's capacity for long-term economic, social, and environmental development and prosperity.

“The Republic of Cyprus intends to move towards sustainable lending through green, social and sustainable tools to complement the objectives of the Recovery and Resilience Plan,” the announcement concluded.

By fLEXI tEAM