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20-02-2019 14:48

Announcement of the Public Debt Management Office on the successful transaction of the new 15 year senior unsecured notes

The Republic of Cyprus, rated BBB- (stable) by Standard and Poor's, Ba2 (stable) by Moody's, BBB- (stable) by Fitch and BBBL (stable) by DBRS, successfully launched its first syndicated transaction of the year, pricing a new EUR 1bn 15 year Reg S registered benchmark due 26 February 2034. The bond carries a coupon of 2.75% and was priced at 99.903%. Citi, Goldman Sachs International and HSBC were mandated as joint bookrunners on the transaction.

Background

  • The objectives of the transaction were in line with the stated Public Debt Management Strategy of the Republic of Cyprus to continue building out an international bond yield curve, manage refinancing risk by smoothening out and lengthening the debt maturity profile, enhance investor relations and expand the existing investor base

Highlights of the Transaction

  • Following its successful funding exercises completed over the course of 2017 and continued market access last year, the Republic of Cyprus launched a new EUR1bn 15 year benchmark transaction, due 26th February 2034
  • Prior to the launch of the transaction, the Republic of Cyprus had conducted extensive marketing efforts, targeting investors in London, Paris, Milan, Munich and Frankfurt. Based on positive feedback from these meetings, the issuer opted for the 15 year maturity and a target EUR1bn in size
  • The mandate for a new EUR 15 year benchmark was officially announced to the market on Monday 18th February at 12:43 CET. Initial price thoughts of MS+200bps area were released around 08:54 CET on Tuesday 19th February, to gather indications of interest
  • On the back of the strong investor demand with interest reaching in excess of EUR 6bn (incl. EUR750mm JLM interest), books were officially opened on Tuesday, 19th February at 10:46 CET, with a revised price guidance of MS+185bps area
  • Demand continued to grow throughout the European morning, with strong interest from the international investor community, allowing the issuer to set the size at EUR1bn and further tighten the spread by 10bps and set at MS+175bps, thereby announcing closure of books at 12:30 CET
  • Final demand of over EUR 8.1bn represents the largest orderbook achieved by a Republic of Cyprus benchmark transaction since the sovereign’s return to the international bond markets in June 2014
  • The deal was priced at 17:44 CET with a cash price of 99.903% and a re-offer yield of 2.758%, thereby offering a minimal new issue concession over the theoretical fair value of the transaction
  • The success of this transaction highlights the strong support from the international investor base for the Republic of Cyprus

Distribution Statistics

  • The transaction saw a strong and diversified international participation, with domestic investors accounting for only 9% of the final allocations, with investors from the German regions being the largest region represented with 27% of the trade
  • By type, Fund Managers took the lion’s share with 55% of the allocations, followed by Banks (20%) and Insurance/Pension Funds (10%)

By geography:

 By investor type:

 

The Republic of Cyprus

EUR 1.0 billion 15yr Benchmark due 26 February 2034 Final Terms and Conditions

Issuer

The Republic of Cyprus, acting through the Public Debt Management Office, Ministry of Finance

Issuer Ratings

BBB-/Ba2/BBB-/BBBL (stab/stab/stab/stab) by S&P, Moody’s, Fitch and DBRS

Status

Senior, unsubordinated

Distribution

Reg S Cat 1

Form of the Notes

Registered

ISIN

XS1956050923

Common Code

195605092

Principal Amount

EUR 1,000,000,000.00

Coupon

2.75%, annual, ACT/ACT (ICMA)

Pricing Date

19 February 2019

Settlement Date

26 February 2019 (T+5)

Maturity Date

26 February 2034

Mid Swap Rate

1.008%

Reoffer Spread to Mid Swap

+175 bps

Benchmark

DBR 4.75 04/07/2034

Benchmark Yield

0.344% (ref price of 165.83%)

Reoffer Spread to Benchmark

+241.4 bps

Reoffer Yield

2.758%

Reoffer Price

99.903%

Up-front Fees

0.20%

All-in Price

99.703%

All-in Yield

2.774%

Net Proceeds

EUR 997,030,000.00

Redemption

100.00% of Principal Amount

Business Days

TARGET 2, Following Business Day Convention, Unadjusted

Documentation

Issuer’s EMTN Programme dated 1st February 2019

MiFID product governance

The target market is professional clients, eligible counterparties and retail (all distribution channels), as defined in MiFID II

CACs

Yes

NGN/NSS

Yes; NSS

Law / Listing

English law / London Stock Exchange, Regulated Market

Denomination

EUR 1K + 1K

Joint Lead Managers

Citi, Goldman Sachs International, HSBC

(AH)