Cypriot bonds held by the Eurosystem steady at €6.76 billion

The value of Cypriot sovereign bonds held by the Eurosystem by end-April remained unchanged at €6.76 billion, as the European Central Bank continues deleveraging its balance sheet in the context of its restrictive monetary policy cycle in a bid to reduce inflation.

According to Eurosystem available data by end April processed by CNA, the value of Cypriot sovereign bonds held by the Eurosystem under the Public Sector Purchased Programme (PSPP) and the Pandemic Emergency Purchases Programme (PEPP) amounted to €6.76 billion and corresponded to 29% of Cyprus’ public debt.

The value of Cypriot bonds under the PESPP portfolio remained at €4.29 billion by end-April, as there were no bond maturities in this period. The last transaction by the Eurosystem in Cypriot bonds was recorded in July 2023 (down by 285 million). The weighted average maturity of the bonds held under the PSPP amounted to 7.62 years.

The ECB as of August 2023 decided to discontinue reinvestments under the wider Asset Purchases Programme (part of which is PSPP) as of July 2023, reducing liquidity in the market complementing its restrictive monetary policy cycle to curb inflation.

The balance of the APP in end April amounted to €2.9 trillion, marking a reduction of €34.4 billion, of which €28.7 billion in the public sector purchases programme.

Furthermore, according to the Eurosystem’s data, the value of Cypriot bonds held under the PEPP also remained unchanged at €2.47 billion in end-March, as no net purchases were recorded for February – March.

The PEPP’s overall balance in end-March stood at €1.66 trillion, down by €43 million, with public sector securities declining by €42 million to €1.61 trillion.

On 14 December 2023 the Governing Council announced that it intends to continue to reinvest, in full, the principal payments from maturing securities purchased under the PEPP during the first half of 2024 and to reduce the PEPP portfolio by €7.5 billion per month on average over the second half of the year. At the same time, the Governing Council announced that it intends to discontinue reinvestments under the PEPP at the end of 2024.

(Source: CNA)