Cyprus Bond yields move higher

After a three month absence from raising funds from the local market, the government finally made its appearance when on January 2, 2007 it decided to raise CYP 150 mln through bond and T-bill auctions, which saw yields moving higher.

The total amount of funds raised through the multiple auctions amounted to CYP 150 mln, eventhough the total of the bids reached CYP 389 mln, as there was a rush to lock in at higher yields ahead of rate conversion before Cyprus adopts the euro in January 2008.

During the auction for the 4.50% bonds maturing in 10 years, the Central Bank acting on behalf of the government auctioned CYP 50 mln worth of bonds with an issue date 2 January 2007, repaid at par in ten years (2017). The total amount of bids reached CYP 133 mln, of which CYP 50 mln were accepted at an average yield of 4.37% and a price of CYP 101.02 per CYP 100 nominal value, up from 4.26% yield reached on October 5, 2006. This compares with comparative yields of 3.92% prevailing on German bunds, 4.74% for UK gilts and 4.68% for US 10-year notes.

The Central Bank also conducted an auction for CYP 50 mln, 4.25% bonds with maturity of 5 years (2007-2012). The total amount of bids reached CYP 131 mln, of which CYP 50 mln were accepted at an average price of CYP 100.13 per CYP 100 nominal value  and a yield of 4.22% compared to 4.11% agreed at the most recent auction held on October 5, 2006.

This compares with comparative yields of 3.89% on German bunds, 5.05% on UK 5-year gilts and 4.66% US Treasury notes maturing in 5-years.

An auction was held for up to CYP 50 mln Treasury Bills with date of issue 3 January 2007 and 13 weeks maturity. The total value of the bids submitted was CYP 125 mln and total value of bids accepted was CYP 50 mln at an average price of CYP 991.11 per CYP 1000 nominal value at a yield of 3.60% compared to 2.56% agreed at the most recent auction held on July 7, 2006.