Bank of Cyprus issues €300 million green bond — 120 institutional investors express interest
The Bank of Cyprus on Thursday announced the successful launch and pricing of €300 million in green senior preferred notes under its EMTN Programme.
According to an official announcement by the bank, the notes were priced at par with a fixed coupon of 5 per cent per annum, payable annually until the Optional Redemption Date of May 2, 2028.
The maturity date of the notes is May 2, 2029, with the bank having the option to redeem them on the optional redemption date, subject to certain conditions outlined in the terms and conditions.
Moreover, if not redeemed, the coupon payable from the optional redemption date until the maturity date will convert to a floating rate of 3-month Euribor + 197.1 bps, payable quarterly.
Settlement of the notes is expected to occur on May 2, 2024, and they will be listed on the Luxembourg Stock Exchange’s Euro MTF market.
“The issuance was met with strong demand, attracting interest from more than 120 institutional investors, with a final order book over 4 times over-subscribed at €1.3 billion and final pricing 50 basis points tighter than the initial pricing indication,” the bank said in the statement.
“The transaction represents the bank’s inaugural green bond issuance in line with the group’s Beyond Banking approach, aimed at creating a stronger, safer and future-focused bank and leading the transition of Cyprus to a sustainable future,” it added.
Furthermore, the bank explained that an amount equivalent to the net proceeds of the notes will be allocated to eligible green projects as described in the bank’s sustainable finance framework, which includes green buildings, energy efficiency, clean transport and renewable energy.
“The success of the transaction, in terms of investor participation and final pricing, represents yet another milestone in terms of market recognition of the group’s improved financial profile,” the bank said.
What is more, the announcement outlined that the notes are expected to comply with the Minimum Requirement for Own Funds and Eligible Liabilities (MREL) criteria, contributing to the bank’s MREL requirements.
Subsequently, this transaction improves the bank’s MREL ratio to 28.36 per cent of risk-weighted assets and 12.73 per cent of Leverage Ratio Exposure, exceeding the final requirements of 25 per cent of RWA and 5.91 per cent of LRE by December 31, 2024.
In addition, the announcement stated that BofA Securities Europe SA, Deutsche Bank AG, Goldman Sachs Bank Europe SE, and J.P. Morgan SE acted as Joint Lead Managers, with the Cyprus Investment and Securities Corporation Limited (CISCO) as Co-Manager.
Finally, the announcement noted that legal advisory was provided by Sidley Austin LLP as English legal advisers and Chryssafinis & Polyviou LLC as Cypriot legal advisers to the bank.