Moody’s covered bond upgrade helps BOC reduce ELA to €4.5bn Thu, 1 Oct 2015
By Stelios Orphanides
Bank of Cyprus said that its covered bond have become eligible for the Eurosystem’s credit operations after Moody’s Investors Service upgraded to B1 from Baa3 on September 29, allowing it to receive funding to repay emergency liquidity from the European Central Bank.
“Following the upgrade to an investment grade rating, the covered bonds have become eligible collateral for the Eurosystem credit operations and, therefore, have been placed as collateral for accessing funding from the ECB,” Cyprus’s largest lender said in an emailed statement on Friday. “Through this transaction, the bank has raised €550m of ECB funding for the repayment of emergency liquidity assistance. Prior to the rating upgrade, the covered bonds were used as collateral for ELA”.
In combination with deposits inflows, the bank was able to repay a total of €1.4bn in ELA since June 30, which helped the bank further reduce its emergency liquidity reliance to €4.5bn, Bank of Cyprus said, which is also considering issuing a security to repay the outstanding amount of emergency liquidity.
“With this transaction the group reaches another milestone in its efforts to restore its financial strength and is part of the group’s strategy to normalize its funding structure and reduce its reliance on ELA,” the bank said. “In total, the reduction in ELA is €6,9bn since its peak of €11,4bn in April 2013”.
Cyprus property prices point to an accelerating growth, according to the THIRTIETH edition of the RICS (Cyprus) Property Price Index.
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