Cypriot Bonds are the Eurozone’s Quiet Star Performers

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. Its long-term borrowing costs are now at the lowest since at least 2001, according to data from the European Central Bank. Investors are now demanding a higher premium to hold Portuguese debt – also a former eurozone bailout nation – over the equivalent Cypriot assets. That’s despite Portugal being included in the ECB’s stimulus programme, where the central bank has bought €26bn of Portuguese bonds over the last two years, helping keep a lid on its borrowing costs. Cyprus has been excluded from the ECB’s QE programme since it exited its rescue programme in March 2016. Read more. (Subscription required.)
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