Bank of Cyprus Public Company Ltd announces that it has been notified by the Ministry of Finance that on 9 June the Government will partially repay a bond held by the Bank by an amount of €750 mn.
According to a press release issued by BoC, the bond being partially repaid is the recapitalisation bond of Laiki Bank that was transferred to the Bank in March 2013, following the acquisition of certain assets and liabilities of Laiki Bank.
The bond is pledged as collateral with the European Central Bank (ECB). Part of the amount repaid will be used to reduce ECB and ELA funding. With the bond transferred to the Bank at fair value at the acquisition date, there will be an accounting profit of about €33 mn resulting from this transaction.
The net interest income of the Bank going forward will be negatively affected by the early repayment of the bond, primarily driven by the upfront recognition of the accounting gain.
The remaining amount of the bond of €340 mn will be replaced on its maturity on 1 July 2015 by a new bond for the same nominal amount, with pricing based on the Cyprus government yields prevailing at the time.
The repayment follows the Government’s recent offering of a €1 bn bond at a coupon of 3,875% and yield of 4% maturing in 2022.
It is noted that on 1 July 2014, the Government repaid another €950 mn of this bond.