10-year bond yield breaks below 6%

After several months of attempts, the yield during the 10-year bond auction finally broke below the 6% level, sending a powerful signal that investors are confident that Cyprus will manage to enter the ERM II shortly, which will allow rates to converge with those of the euro-zone.

During the 10-year auction held on February 24 by the Central Bank on behalf of the government for up to CYP 40 mln, there was a huge over-subscription as the total value of the bids submitted reached CYP 91.741.500. The total value of bids accepted was CYP 40 mln at the weighted average price of CYP 100,83 per CYP 100 nominal value representing an annual yield of 5.89% compared to 6.07% agreed at the auction held on January 19.

The February auction also saw the government’s return to the 2-year auction, from which it had been absent since November 17. During the 2-year auction for up to CYP 20 mln, the Central Bank received a total of CYP 8.170.00 bids of which CYP 5.170.000 were accepted at the weighted average price of CYP 99,69 per CYP 100 nominal value representing an annual yield of 5.16% compared to a yield of 5.42% agreed at the November 17 auction.

During the 5-year auction for up to CYP 80 mln, the Central Bank received a total of CYP 57.407.000 bids of which it accepted CYP 55.337.000 at the weighted average price of CYP 99,07 per CYP 100 nominal value representing an annual yield of 5.97% compared to 6.01% agreed at the January 19 auction.

During the auction of up to CYP 30 mln Treasury Bills 52 weeks maturity the total value of the bids submitted was CYP 25.382.000. All the bids submitted were accepted at the weighted average price of CYP 952,33 per CYP 1.000 nominal value representing an annual yield of 5.02% compared to 5.03% agreed during the January 19 auction.