BONDS: Cyprus borrowing cost declines to a four-year low

Cyprus ten-year bond yield declined to a four-year low in the backdrop of the ECB`s decision to purchase of private sector credit, including asset-backed securities and covered bonds.

According to figures analysed by CNA, the yield of Cypriot ten-year bond that matures in 2020 declined in Monday to 4.50% from 4.54% in Friday, reaching a new low of the last four years.

The five-year bond (maturing in 2019) its downward path declining to 4.36% on Monday from 4.45% on Friday, remaining below the nominal yield of 4.85% defined during its issuance on June 18, 2014. The issue of the five-year bond represented Cyprus return to the international markets since the agreement with its international lenders on a €10 billion bailout in March 2013.

The spread of the Cypriot 10year bond and the German bond declined to 355 basis points.

The Cypriot borrowing costs spiked on June 14, 2012 a historic high reaching 16,5% but entered a downward path after the government requested financial assistance from the EU and the IMF.

The island`s borrowing costs began rising anew following the bailout agreement in March 2013, that featured the haircut of bank deposits over €100,000 to save the island`s largest lender, Bank of Cyprus.