In a strategic move to leverage the favorable market conditions following the successful issuance of their Additional Tier 1 bond in mid-June, the Bank of Cyprus is now venturing into the market with a new high-priority bond worth €300 million.

This upcoming bond offering will meet the criteria set for the minimum requirement for own funds and eligible liabilities (MREL), a significant milestone for the bank.

According to insider sources, the book of offers for the bond opened at an interest rate of approximately 7.75% (consisting of Euribor plus a margin of around 4.40%). This competitive rate indicates the bank's confidence in attracting potential investors.

The Bank of Cyprus has set an ambitious target by the Single Resolution Board (SRB) to reach 24.35% of weighted assets, which translates to a substantial €2.47 billion. Recent figures from the bank indicate that the formation of MREL stands at 20.82%, equivalent to €2.12 billion. 

Despite this, there remains a deficit of approximately €350 million to be addressed by the end of December 2025. It is worth noting that the Central Bank's decision to increase the countercyclical buffer to 1% starting in June 2024 imposes an additional obligation of €100 million.

With the launch of this new bond issuance, the Bank of Cyprus is poised to make significant progress toward achieving its target. Nevertheless, it is likely that another bond issuance may be necessary in the coming year to ensure full compliance with the established requirements.

To navigate this complex financial landscape successfully, the Bank of Cyprus has enlisted the services of esteemed advisors, including Bank of America, Barclays, Citi, Goldman Sachs Bank Europe SE, and CISCO. These trusted entities have organized a series of presentations to attract potential investors, underlining the bank's commitment to fostering a productive and mutually beneficial relationship with the financial community.

The Bank of Cyprus' decision to enter the market with a new bond issuance demonstrates its proactive approach in capitalizing on the positive market dynamics and investor sentiment following the successful launch of the Additional Tier 1 bond. By meeting the rigorous MREL criteria, the bank aims to bolster its financial strength and ensure compliance with regulatory requirements. As the bank edges closer to achieving its targeted goals, it remains poised for future growth and continued success in the financial industry.