Refinancing of AT1 Capital Securities

Bank of Cyprus Holdings PLC

13 June 2023

 

Announcement       

Refinancing of AT1 Capital Securities

Nicosia, 13 June 2023

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014.

Group Profile

The Bank of Cyprus Group is the leading banking and financial services group in Cyprus, providing a wide range of financial products and services which include retail and commercial banking, finance, factoring, investment banking, brokerage, fund management, private banking, life and general insurance. At 31 March 2023, the Bank of Cyprus Group operated through a total of 64 branches in Cyprus, of which 4 operated as cash offices. The Bank of Cyprus Group employed 2,883 staff worldwide. At 31 March 2023, the Group's Total Assets amounted to €25.4 bn and Total Equity was €2.1 bn. The Bank of Cyprus Group comprises Bank of Cyprus Holdings Public Limited Company, its subsidiary Bank of Cyprus Public Company Limited and its subsidiaries.

Bank of Cyprus Holdings Public Limited Company (the 'Company' or 'BOC Holdings' and, together with its subsidiaries, the 'Group') announces today that the Company has successfully launched and priced an issue of €220 mn Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities (the 'New Capital Securities').

The issue was met with exceptional demand, attracting interest from c.240 institutional investors, with the final order book over 12 times over-subscribed and final pricing 62.5 bps tighter than the initial pricing indication. This also reflects significant improvement in the credit spread to c.910 bps compared to c.1,260 bps for the previous AT1 issue in 2018. A number of long term, institutional investors participated in the offering, indicating the successful presence of the Company in the capital markets.

The New Capital Securities constitute unsecured and subordinated obligations of the Company, are perpetual and are issued at par. They carry an initial coupon of 11.875% per annum, payable semi-annually, and resettable on 21 December 2028 and every 5 years thereafter. The Company will have the option to redeem the New Capital Securities from, and including, 21 June 2028 to, and including, 21 December 2028 and on each interest payment date thereafter, subject to applicable regulatory consents and the relevant conditions to redemption.

The New Capital Securities are expected to be rated B3 by Moody's Investors Service Cyprus Limited.  The New Capital Securities will be admitted to the official list of the Luxembourg Stock Exchange and admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange.

The net proceeds of the issue of the New Capital Securities will be on-lent by BOC Holdings to its subsidiary, Bank of Cyprus Public Company Limited (the 'Bank') and will be used by the Bank for general corporate purposes. The on-loan is intended to qualify as Additional Tier 1 capital for the Bank.

The issuance of the New Capital Securities will maintain the Group's optimised capital structure and continue to contribute to the Group's Total Capital Ratio by c.220 bps. The issuance is expected to be MREL eligible, contributing towards the Bank's MREL requirements.

In addition to the above and following the announcement on 12 June 2023, the Company invited the holders of its outstanding €220 mn Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities callable in December 2023 (ISIN: XS1865594870) (the 'Existing Capital Securities') to tender their Existing Capital Securities at a purchase price of 103% of the principal amount, as described in the Tender Offer Memorandum dated 12 June 2023. Please click here for further details.

Panicos Nicolaou, Bank of Cyprus Group Chief Executive Officer, commented:

"We are delighted with the exceptional investor interest in our AT1 Capital Securities issue, which follows positive engagement with investors over recent months and our guidance upgrade for 2023 and 2024 at our Investor Update event in London on 8 June 2023.

The significant improvement in the Bank's credit spreads of c.350 bps, compared to our previous issue of AT1 Capital Securities in 2018, reflects the Bank's successful transformation into a well capitalised, diversified and sustainably profitable financial services group.

We look forward to continuing our constructive engagement with our debt and equity investors."

BofA Securities Europe SA and Goldman Sachs Bank Europe SE acted as Global Coordinators and Structural Advisers, and together with BNP Paribas and J.P. Morgan SE acted as Joint Lead Managers.

Note: The Capital Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the 'Securities Act') and were not offered, sold or delivered within the United States or to U.S. persons, as defined in Regulation S under the Securities Act.

For further information, please contact Investor Relations at [e-mail].

 

END