Breaking news

Bank Of Cyprus Successfully Launches Oversubscribed €300 Million Tier 2 Capital Notes Issue

by THEFUTURE.TEAM

September 11, 2025

Transaction Overview

The Bank of Cyprus (BoC) announced on Thursday the successful launch and pricing of a €300 million unsecured, subordinated Tier 2 Capital Notes issue under its €4 billion Euro Medium Term Note Programme, scheduled for September 10, 2025. The transaction garnered strong investor interest, reflecting deep market confidence in the bank’s financial prospects.

Investor Demand And Market Reception

Demand surpassed expectations with over 100 institutional investors participating, driving the final order book to exceed €3 billion—more than ten times the issued amount. This overwhelming response underscores robust investor confidence from both local and international markets.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Pricing And Yield Improvements

The strong demand allowed BoC to secure a final pricing spread of 195 basis points, notably tighter by 35 basis points than the initial indication. The effective yield of 4.321 percent compares favorably against the initial rate of 4.67 percent, outperforming the bond currently being refinanced and even recent Senior Preferred bond issuances. Analysts note that these improvements position the bank’s offering competitively against Greek bonds.

Bond Specifications And Redemption Terms

The new notes, priced at 99.632 percent with a fixed annual coupon of 4.25 percent, will reset on September 18, 2031, and mature on September 18, 2036. BoC has retained the option to early redeem the notes anytime within a six-month period commencing March 18, 2031, subject to regulatory consents. Settlement is slated for September 18, 2025.

Market Ratings And Capital Impact

Moody’s Investors Service Cyprus Limited rated the new notes Ba1, further solidifying market confidence. These notes will be listed on the Luxembourg Stock Exchange’s Euro MTF market. Proceeds are set to be on-lent to BoC Public Company Limited for general funding purposes, qualifying as Tier 2 capital. The issuance is expected to bolster the group’s Total Capital Ratio by approximately 300 basis points while maintaining an optimised capital structure.

Additional Strategic Moves

In related developments, BoC has invited holders of its outstanding €300 million Fixed Rate Reset Tier 2 Capital Notes—callable between April 23, 2026, and October 23, 2026—to tender their notes at a purchase price of 102.3 percent of the principal amount. Additionally, the bank intends to repurchase its existing subordinated bond maturing in 2031 at the same pricing, further streamlining its debt profile. The transaction was coordinated by stalwarts such as BofA Securities Europe SA and Goldman Sachs Bank Europe SE, with additional participation by Barclays Bank Ireland PLC, Citigroup Global Markets Limited, Morgan Stanley Europe SE, and Cisco acting as Co-Manager.

The Future Forbes Realty Global Properties

Cyprus Hotel Bookings Recover, But Season Still Set For 20% Loss

Hotel bookings in Cyprus are showing signs of recovery after months of disruption linked to tensions in the Middle East. However, the island’s tourism industry is still facing an average loss of about 20 per cent for the remainder of the season, according to the president of the hotel managers association.

Booking Momentum Returns, But Losses Persist

Christos Angelides said the wave of cancellations recorded over the past two to three months has eased, with bookings improving both in the short term and for the remainder of the season.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

Speaking to the Cyprus News Agency, he said demand has yet to recover sufficiently to offset earlier losses or deliver what would normally be considered a strong year for the tourism sector.

Hotels Adjust Pricing To Support Demand

Hotels and other tourism businesses are responding with more competitive pricing and targeted promotional campaigns, including offers aimed at the domestic market. Angelides noted that airfares and accommodation prices in competing destinations have also increased.

“Destinations which were previously considered cheaper than us no longer are,” he said. At the same time, he expects more Cypriots to weigh household budgets before choosing to travel abroad.

Airlines And Israeli Tourism Show Early Signs Of Recovery

Asked about flight cancellations and route adjustments, Angelides said airlines have reduced some services because of higher aviation fuel costs. He expressed hope that easing regional tensions would lower fuel prices and airfares, supporting a stronger autumn and potentially winter season.

Visitor numbers from Israel have also started to recover after falling to almost zero for roughly two to three months. Angelides said daily arrivals are increasing and that even short stays of two or three days would provide meaningful support to the tourism industry. Last-minute bookings, he added, are already helping to strengthen demand and could continue to support the sector through the rest of the season.

Protecting Cyprus’ Tourism Reputation

Despite weaker occupancy rates, Angelides said maintaining service quality remains essential. He identified two immediate priorities for the sector: recovering from the decline in hotel occupancy recorded in March, April and May, and safeguarding Cyprus’ reputation as “a quality and pleasant destination” built over many years.

Angelides also called for a sustained promotional campaign through the end of 2027 to help restore momentum in international markets and dispel any remaining concerns about Cyprus as a safe destination.