The interest rate on the new subordinated bond (Tier 2 capital), amounting to 300 million euros, issued by the Bank of Cyprus, was set at 4.25%.
The bonds were issued at a price equal to 99.632%, setting the yield at 4.32% – from 4.67%, which was the initial estimate.
At the same time, the bank has invited the holders of existing securities amounting to €300 million and maturing in October 2031 to opt for early redemption between April and October 2026 with a purchase price equal to 102.3% of the nominal value of the securities.
The final pricing of the new bond carries a spread of 195 basis points – 35 basis points lower than the initial pricing indication – and as bank sources comment, “the spread is much better than the existing bond that the bank is refinancing.
It is also even lower than that of the last senior preferred bond issue and at the same or even better levels than Greek bonds.”
The proceeds from the issuance of the new securities are to be granted in the form of a loan by BoC Holdings to its subsidiary, Bank of Cyprus, to be used for financing purposes.
The loan is expected to meet the conditions to be counted as additional Tier 2 capital for the bank.
As announced, the issuance saw significant demand, attracting interest from more than 100 institutional investors.
The final offer book exceeded €3 billion, was oversubscribed more than 10 times and, as the bank comments, “both the strong participation of institutional investors and the final pricing reflect the recognition of the group’s strong financial profile by the markets.”