Slovenia has issued a €1.25 billion sustainability bond to become the first country in the region to tap the bond market amidst rising interest rates.

The issue has a coupon rate of 3.625%, which compares to just 0.125% for the country's first sustainability bond, which was issued in June 2021.

The Finance Ministry described the transaction as successful since demand exceeded €10 billion, and as "strong proof of institutional investor confidence in Slovenia."

Sustainability bonds can be used exclusively to finance sustainability-oriented projects.

The treasury also extended an existing ten-year eurobond by €250 million. That bond has a coupon rate of 3.125%.

Slovenia has made it a habit to test the bond market early in the year and in recent years it has typically secured the bulk of annual debt financing in the first months of the year.

Under the 2023-2024 budget implementation act, the treasury can borrow just shy of €5 billion for this year's state budget and up to €4.58 billion to finance the 2024 budget.

Delo newspaper has calculated that the €1.5 billion raised this week will suffice to cover budgetary needs in the first quarter of the year and to refinance debt that is due in March.