The Slovenia Times

Slovenia Secures 2.4% Yield on EUR 1BN Bond Issue


The bond issue was confirmed by the Finance Ministry in a statement released in the evening, after it said in the morning that Slovenia was looking to tap the bond market.

An unnamed source close to the transaction had confirmed the issue already late in the afternoon, telling STA that Slovenia secured a yield of 2.4% on the papers due in March 2022 as demand outstripped supply by 3-to-1.

The ministry confirmed orders of EUR 3.2bn for the bonds carrying an annual coupon rate of 2.25%. With the issue price at 99.095%, the bond secured a spread of 160 basis points compared to mid-swaps.

The euro-denominated issue is the second time this year that Slovenia has tapped the euro bond market, after it issued EUR 2bn in 3.5- and seven-year bonds in early April.

The seven-year bond was sold at a coupon rate of 3% back then.

While no additional international borrowing had been anticipated this year, the Finance Ministry said today's issue was intended for pre-financing for 2015 and 2016 budget needs.

The government is expected to put forward a supplementary budget for this year and is in the midst of drafting a revamped budget for next year.

Its plans for this year envisage a rise in the deficit from EUR 1bn in the original budget to EUR 1.2bn.

In the supplementary budget for 2015 it is seeking to lower the budget deficit to below 3% of GDP, in line with promises given to the European Commission.

The ministry hailed the oversubscription of today's issue as a show of confidence in measures carried out by the country to stabilise its banking system and push ahead with structural reforms.

The issue was managed by Barclays, Credit Agricole CIB, Deutsche Bank and J.P. Morgan and saw the participation of 275 investors.

Asset managers represented the biggest buyers, acquiring 54% of the issue. Hedge funds bought 18%, banks 15%, insurance and pension funds 8% and central banks 5%.


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