.jpg)
Interest has recovered in the monthly issue of 6-year retail bonds, the government’s alternative financing method after the economy crashed two years ago, with €28.4 mln sold in the October series, having plunged to their lowest level in September series when interest rates were lowered substantially.
The Public Debt Management Office of the Ministry of Finance said that the tenth series attracted 61 bids for a total of €28,424,600, nearing the year’s highs of €30 mln in the August issue and €31 mln the month before.
The October series bids ranged from €1,500 to €5 mln, with the majority €25.5 mln from foreign investors.
Previous issues attracted non-EU foreign investors, keen to pump in at least €300,000 to secure a residence permit or more €3 mln to qualify for citizenship.
The PDMO said that the year-to-date figure has now reached €182.8 mln, of which €58.3 mln from Cypriot investors and €124.5 mln from foreign nationals.
The reason for the drop in the September series to just €3.8 mln was the reduction in the average 6-year yield to 2.79%, down from the 4% average at the launch of the programme.
Bids for the eleventh series for November will open from October 2 to 20 and will be issued on November 1.
The retail bond offer, that is restricted to individuals and supposed to have a monthly cap of €10 mln, with the aim of raising €100-120 mln a year, has raised €243 mln for the government since the programme was launched in 2014 that has only this year returned to the markets following an austere bailout programme imposed the Troika of international lenders in 2013.
The interest rate for the 2015 series had been adjusted downwards by 0.25 percentage points and ranged from 2.50% for the first year to 5.50% in the final year. These are subject to 3% tax on interest, far more attractive than the 30% tax imposed on bank deposit interest.
In May, the PDMO said it was lowering the interest rate on future bonds starting from the September series, 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.
The annual coupon rate when the series was first launched in May 2014 started from 2.75% and averaged at an attractive 4% over a six-year period.
