Cyprus' 10-year Sustainable bond closes at €12.1b with 4.125% interest

The Republic of Cyprus’ €1b inaugural Sustainable 10-year fixed-rate benchmark transaction has closed with a final demand over €12.1b and an annual 4.125% interest.

The Ministry of Finance’s Public Debt Management Office said that this was the largest order book achieved in a single-tranche syndicated transaction by Cyprus since the sovereign’s return to the international bond markets in June 2014.

Furthermore, it is also the second largest order book on record for a Sustainable benchmark issued by a Eurozone sovereign.

The 10-year Sustainable bond was priced with a reoffer spread of m/s+125bp, equivalent to a reoffer yield of 4.219% and a spread of +189.6bp vs. the DBR 2.3% Feb-33. The annual nominal interest rate of the bond is 4.125%.

The joint lead managers of this transaction were Barclays, HSBC, J.P. Morgan, Morgan Stanley and Société Générale. Furthermore, HSBC and J.P. Morgan assisted the Republic of Cyprus as joint structuring agents.

The listing is in London under English law and is launched off the issuer’s EMTN programme.

The bond attracted orders from a diverse array of high-quality investors. With regard to the geographical distribution, 80% of orders came from international investors. Of these, the highest proportion originated from the United Kingdom.

In terms of investor type, the majority of participants were fund managers and banks/ private banks.

The statement notes that “the Republic of Cyprus has placed sustainability at the heart of its Recovery and Resilience Plan (2021-2026) with the key strategic goal to strengthen the economy’s resilience and the country’s potential for economically, socially and environmentally sustainable long-term growth and welfare”.

At the same time, the Republic of Cyprus intends for sustainable borrowing under Green/Social/Sustainable Instruments to complement the objectives of the Recovery and Resilience Plan.