CYPRUS: PDMO sells €12 mln in 6-year bonds, cuts future rates

The Ministry of Finance sold 6-year government bonds worth €12 mln in its monthly offer this week, but also proceeded to lower the interest rates for a second time that had made the retail bonds attractive to individual investors.

The Public Debt Management Office said that for the May bonds, the Republic received 92 offers for the total of €11,918,700, of which €5 mln were foreign investors.
The offers ranged from €1,500 to €2.5 mln for an average value of €129.551.
The PDMO will also issue the next six-year bond of €10 mln on July 1 and the offer period will be from June 2 to 19.
On Wednesday, the PDMO said it was lowering the interest rate on future bonds starting from the September series, to be offered on August 3-20.
Thus, the rate will be lowered to 2.5% for the first 24 months, 2.75% for 24-48 months, 3.00% for 48-60 months and 3.25% for 60-70 months.
This will generate an average 6-year yield of 2.79%, down from the 4% average at the launch of the programme. As a consolation prize, the PDMO said that the present rates will be maintained through the current and previous bond issues, until they expire.
At the beginning of the year, the PDMO lowered rates by 0.5% starting from an initial 2.5% for up to 24 months and gradually increasing to 5.5% for a minimum of 60 months holding.
The annual coupon rate when the series was first launched in 2014 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.