Cyprus

Investors demanded a hefty premium from Bank of Cyprus as it raised fresh capital this week, illustrating the continuing toll that heightened market volatility is taking on eurozone financials, the Financial Times reported. The Mediterranean lender is having to pay the highest coupon yet seen on a European contingent convertible bond, demonstrating the lengths that some of the continent’s weaker lenders will have to go to raise capital if market volatility continues.
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Bank of Cyprus has struck a deal to sell a €2.7bn non-performing loan portfolio in a “transformative” deal for the bank that was one of the highest-profile casualties of the eurozone crisis, the Financial Times reported. The agreement to sell the loan portfolio to Apollo Global, the US-based private equity firm, for €1.4bn comes as European banks have ramped up sales of bad loans following pressure from the ECB to clean up balance sheets.
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Cypriots will return to the ballot box on Feb. 4 to choose a leader who can oversee the Mediterranean island’s economic recovery nearly six years after the country came close to financial collapse, Bloomberg News reported. Incumbent President Nicos Anastasiades, 71, will face Stavros Malas in the runoff after taking 35.5 percent of the vote compared with 30.3 percent for Malas, an independent candidate backed by the leftist Akel party, according to Cypriot Interior Ministry figures.
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Offshore driller Ocean Rig UDW Inc is preparing to explore a sale amid pressure from some of its largest shareholders to review its strategic alternatives, according to three people familiar with the matter. The move will be a key test of Ocean Rig’s value after it emerged from Chapter 15 bankruptcy in September, Reuters reported. Its business has suffered as low oil prices have made offshore drilling less economically attractive and pushed more oil exploration onshore.
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Bank of Cyprus, the only eurozone bank to forcibly bail in depositors during the financial crisis, has been fined €18m by the island’s competition regulator for abusing its dominant market position in the credit cards, the Financial Times reported. The bank, which was restructured as part of the €10bn international rescue of the Cypriot banking sector in 2013, said in a statement on Wednesday it would appeal the fine “through all available court processes”. The Cyprus Commission for the Protection of Competition announced the fine on May 22.
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Amid “Trumpflation” trades and nerves over eurozone political risk, one corner of Europe’s debt markets has been quietly motoring along: Cyprus. Having undergone a €10bn banking rescue at the hand of creditors in the EU and International Monetary Fund in 2013, Cyprus exited its bailout programme last year and has seen its government borrowing costs tumble to 15 year lows since, the Financial Times reported. The yield on the country’s comeback 10-year bond issued in late 2015 has fallen to as low as 3.2 per cent from a peak of just over 4 per cent at the start of last year.
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The banking woes of Italy, the euro area’s third-biggest member, pale next to those that, four years ago, plagued Cyprus, its second-smallest. Now there is cause for cautious optimism, The Economist reported. This month Bank of Cyprus, the biggest local lender, finished repaying €11.4bn ($12.2bn) of emergency liquidity assistance from the country’s central bank. It followed that by returning to the bond markets, raising €250m in a sale of unsecured notes, albeit with a stiff 9.25% coupon. Even better, on January 19th Bank of Cyprus listed on the London Stock Exchange.
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Bank of Cyprus will discover whether investors have bought into its recovery story as it offers its first public bond since imposing losses on bondholders in 2013 during the Cypriot banking crisis, Reuters reported. The bank began marketing a 200m minimum 10-year non-call five-year Tier 2 bond at 9.5% area on Thursday morning via Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank and HSBC. The transaction is expected to be rated Caa3 by Moody's. Bank of Cyprus is rated Caa2 by Moody's and B- by Fitch.
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Bank of Cyprus, one of the biggest casualties of the eurozone financial crisis, can once again offer investors a dividend after repaying its “monstrous” emergency funding almost a year ahead of schedule, the Financial Times reported. The Cypriot bank rose to prominence in 2013 when it used deposits of above €100,000 to help fund its rescue deal, the first example of the “bail in” that the EU hoped to use so taxpayers would no longer carry the can for failed banks.
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To date, 1,019 debt-relief applications have been filed with the Insolvency Service, according to its chief George Karotsakis, Cyprus Mail reported. The service meanwhile has secured 56 court orders relieving debtors – and their guarantors – of unsecured loans of up to €25,000. Karotsakis was speaking to the Cyprus News Agency (CNA), on the occasion of the 16 months since the introduction of the insolvency framework. As a result of the efforts, he said, the World Bank in its ‘Doing Business’ report currently ranks Cyprus 16th in resolving insolvencies.
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