Cyprus hunts investors for first-ever sustainable bond

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Cyprus hired banks to market its first-ever sustainable bond, according to the Public Debt Management Office.

Cyprus is looking for investors to issue a sustainable bond, the Financial Director of the Public Debt Management Office, Phaedonas Kalozois, told CNA.

“The bond will only be issued if the market conditions allow it,” Kalozois said.

“What we are doing now is contacting investors.”

“We will see the amount and the rest of the conditions next week”, he said.

Green bonds are a financing tool that offers Cyprus multiple advantages as it will provide access to new investors and increase interest in the international capital markets for the Republic.

While most countries issue green bonds, Cyprus chose to proceed with issuing a sustainable bond to include funding for social projects and green ones.

The country is set to join a flurry of European governments that have launched dedicated programmes to sell billions of euros of debt funding environmentally beneficial projects as investor demand for such assets has surged.

Cyprus’ funding team will hold investor meetings during the week.

Sustainable bonds are a broader form of environmental, social, and governance-focused (ESG) debt, of which proceeds can be spent on green and social projects.

Most European governments have sold standalone green bonds.

But Cyprus follows several smaller countries, including Slovenia and Luxembourg, which have opted for sustainable bonds as they often need help finding enough projects to back standalone green bonds.

Reuters reported last year that Cyprus would look to raise at least €500 mln from its first issuance.

Cyprus has identified €1.06 bln of assets to fund through its sustainable bond programme, 83% of which are social projects and 17% green, according to an investor presentation.

According to the lead manager memo, Barclays, HSBC, JPMorgan, Morgan Stanley, and Societe Generale will manage the deal.