For the first time since undergoing a financial crisis last year, Cyprus has entered the international sovereign debt market through the issuance of new government bonds.
The struggling eurozone country offered 5 year bonds with yields of 4.85% and was able to raise an amount of €750 million from enthusiastic international investors, possibly signifying that confidence in their economy is on its way back up. Investors lined up for the bond resulting in an over subscription with fund managers making up the single largest block of buyers of nearly half. According to bankers involved in the transaction, hedge funds came next with 27% followed by banks at 22%.
Recent revelations from the European Central Bank were seen to have an influence in the sale as their newly introduced negative rates have proven to be effective in driving down yields of sovereign bonds.
The successful bonds offering bodes well not only for Cyprus, but also for the eurozone as it has struggled to pick up the economies of its peripheral members that have undergone crisis and make itself more balanced. The country’s banking industry collapsed in early 2013 for which they needed the combined support of the European Central Bank, the European Commission, and the International Monetary Fund to recover from with a €10 billion bailout.
The major rating agency Standard & Poor brought more good news to Cyprus when it moved its credit rating up a notch to B after its economic contractions last year were slowed down to 5.4%. It is hoped that this will result in more corporations and financial investors moving to re-enter markets restore liquidity in Cyprus.
Greece was the second latest peripheral member of Europe’s monetary union to issue bonds which they did in April this year. Their five year bonds, even with yields lower than market expectations at 4.95%, was able to raise €3 billion during that time.
The material has been provided by InstaForex Company – www.instaforex.com
For the first time since undergoing a financial crisis last year, Cyprus has entered the international sovereign debt market through the issuance of new government bonds.
The struggling eurozone country offered 5 year bonds with yields of 4.85% and was able to raise an amount of €750 million from enthusiastic international investors, possibly signifying that confidence in their economy is on its way back up. Investors lined up for the bond resulting in an over subscription with fund managers making up the single largest block of buyers of nearly half. According to bankers involved in the transaction, hedge funds came next with 27% followed by banks at 22%.
Recent revelations from the European Central Bank were seen to have an influence in the sale as their newly introduced negative rates have proven to be effective in driving down yields of sovereign bonds.
The successful bonds offering bodes well not only for Cyprus, but also for the eurozone as it has struggled to pick up the economies of its peripheral members that have undergone crisis and make itself more balanced. The country’s banking industry collapsed in early 2013 for which they needed the combined support of the European Central Bank, the European Commission, and the International Monetary Fund to recover from with a €10 billion bailout.
The major rating agency Standard & Poor brought more good news to Cyprus when it moved its credit rating up a notch to B after its economic contractions last year were slowed down to 5.4%. It is hoped that this will result in more corporations and financial investors moving to re-enter markets restore liquidity in Cyprus.
Greece was the second latest peripheral member of Europe’s monetary union to issue bonds which they did in April this year. Their five year bonds, even with yields lower than market expectations at 4.95%, was able to raise €3 billion during that time.
The material has been provided by InstaForex Company – www.instaforex.com
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