CYPRUS: Demand for 6-year retail bonds drops to €9.4m

Demand for 6-year Cyprus government retail bonds dropped to €9.4 mln this month, down from the record €36.7 mln in December, with most of the interest continuing to come from foreign investors.

The February 2015 issue that carries a staggered interest rate that averages 4% over six years, has so far raised just under €110 mln for state coffers, as the government has resorted to alternative means to raise funds ever since it was shunned by markets due to the recessionary economy and only returned last year.
The government’s aim was to attract about €10 mln a month, while non-EU investors are lured with the incentive of securing a permanent residency permit.
The Public Debt Management Office at the Ministry of Finance said that the ninth series attracted 35 bidders for €9,375,600 of which only two were foreign investors, but they offered €7.5 mln, or about 80% of the total value.
The tenth retail bond be issued on March 2, the third of the 2015 series maturing in 2021, will once again be for €10 mln with applications accepted from February 2 to 20.
Depending on the holding period, the 2015 issue offers an annual interest rate of 2.5% for holding the securities up to 24 months and gradually increases to 5.5% for a minimum of 60 months holding.
The annual coupon rate for the 2014 series started from 2.75% and averaged at an attractive 4% over a six-year period, with a minimal 3% income tax on the interest, far better than the 30% imposed on all interest-yielding products.