10-year bond yield de­clines to 4-year low

Financial Mirror (Cyprus) - - FRONT PAGE -

The yield on the ten-year bond, and sub­se­quently the cost of bor­row­ing for Cyprus, de­clined to a four-year low in the back­drop of the ECB’s decision to pur­chase of pri­vate sec­tor credit, in­clud­ing as­set-backed se­cu­ri­ties and cov­ered bonds.

The yield of Cypriot ten-year bonds that ma­ture in 2020 de­clined on Mon­day to 4.50% from 4.54% on Fri­day, a new low in the last four years.

The five-year bond (ma­tur­ing in 2019) also con­tin­ued its down­ward path de­clin­ing to 4.36% on Mon­day from 4.45% on Fri­day, re­main­ing be­low the nom­i­nal yield of 4.85% de­fined dur­ing its is­sue on June 18, the first time Cyprus re­turned to the in­ter­na­tional mar­kets in four years.

The spread of the Cypriot 10-year bond and Ger­man bond de­clined to 355 ba­sis points.

The Cypriot bor­row­ing costs spiked on June 14, 2012 to a his­toric high of 16.5% but en­tered a down­ward path after the gov­ern­ment re­quested fi­nan­cial as­sis­tance from the EU and the IMF.

The is­land’s bor­row­ing costs be­gan ris­ing anew fol­low­ing the bailout agree­ment in March 2013, that fea­tured the hair­cut of bank de­posits above 100,000 to save Bank of Cyprus that, in turn had ab­sorbed the now de­funct Laiki Popular Bank, twice res­cued with a gov­ern­ment bailout.

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