The Bank of Cyprus has launched an issue of €250 mln unsecured and subordinated Tier 2 capital notes under the bank’s EMTN programme pricing the 10-year bond at 9.25% and marking the lender’s return to the markets, its chief executive said.
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Settlement for the bond, that is expected to be rated at Caa3 by Moody’s, will occur on January 19, 2017, the same day that the restructured bank will debut on the London Stock Exchange.
Credit Suisse and HSBC acted as global coordinators and joint bookrunners for the issue, while BofA Merrill Lynch and Deutsche Bank acted as joint bookrunners. On December 14, Moody’s upgraded the bank’s Euro MTN programme at Caa2, while the bank also carried a B- rating from Fitch.
The bond issue follows the bank’s announcement last week that it has fully repaid the emergency liquidity allowance (ELA) facility of €11.4 bln imposed after the banking crisis in 2013 and the burdening of now-defunct Laiki Popular Bank’s debts and liabilities.
The repayment, that also paves the way for the bank to resume dividend payments for the first time in five years, was considered as “credit positive” by Moody’s.
According to a bank announcement, the bonds mature on January 19, 2027, but the bank said it will have the option to redeem the notes early on 19 January 2022, “subject to applicable regulatory consents.”
The 10-year bonds will be listed on the Luxembourg Stock Exchange’s Euro MTF market and the bank said that the issuance is part of a strategy to optimise the level and composition of its capital and liabilities, with a positive impact of approximately 130 basis points on the bank’s total capital ratio, as per financial results for the nine months ended September 30.
Commenting on the bond issue, CEO John Hourican, credited with driving the ELA repayment plan, the bank’s restructuring and the sell-off of not-prime assets at home and abroad, said that “the successful return to the debt capital markets demonstrates the confidence of international investors in the bank.”
“This is a further step in the normalisation of the bank’s funding structure, following the recent full repayment of ELA funding, and is another significant milestone in the bank’s journey back to strength,” Hourican concluded.
