Cyprus
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◆ Issuer committed to cancelling as much old capital as possible ◆ Buying back above par ◆ All buying-back thanks to new AT1 providing capital optimisation
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◆ Strong market supports AT1 return ◆ Lower funding, dedicated investors likely behind the infrequent issuer ◆ Will it be a true market reopener?
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The government plans to bring a labelled issue every two or three years from now on
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SSA issuers in euros have gone up a gear as Easter break nears
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Cyprus concession looks higher than other SSAs this week, but bankers blame rating rather than systemic widening
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Moody’s upgraded Cyprus on Friday, leaving it one notch below investment grade status and a step closer to reclaiming high grade ratings from all three of the major rating agencies.
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Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, February 8. The source for secondary trading levels is ICE Data Services.
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Cyprus attracted sold demand when it hit the market for a new five euro benchmark on Tuesday. The trade was priced with a positive yield – a rarity for a eurozone sovereign bond in this part of the curve.
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Cypriot banks could start selling covered bonds for the first time in a decade if the country clarifies and strengthens its issuing framework in line with new EU standards, Scope Ratings said in a report this week.
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The European Financial Stability Facility kicked off its third quarter funding in style as it raised 80% of its borrowing needs for the quarter flat to its sister issuer’s curve. Elsewhere in the euro market on Tuesday, Cyprus saw decent demand as it tapped its 2024s and 2040s.
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Cyprus will return to the market with a pair of taps on Tuesday, hitting screens alongside the European Financial Stability Facility’s new five year line, providing an excellent opportunity to compare Cyprus’s cost of funds with the cost of the European Stability Mechanism’s pandemic crisis support facility.