Slovenia issues bonds worth EUR 1.75 billion

Ljubljana – Slovenia continued the tradition of tapping markets very early in the year this year as well by issuing four- and 40-year bonds in the total value of EUR 1.75 billion. The four-year bond is worth EUR 1.25 billion and the 40-year half a billion.

The yield on the 4-year bond is negative at -0.241%. “This means the budget will get EUR 12.3 million,” the Finance Ministry announced, adding: “It also proves the government polices are effective and successful”.

The yield on the 40-year bond is 1.183%. “It proves the state’s excellent position in the capital markets,” the ministry added in a post on gov.si.

The coupon rate of the 4-year bond was set at 0.000%. The spread to midswap (MS) was -21 basis points and the yield to maturity at -0.241%, equivalent to a spread of 24.3 basis points above the reference German bond DBR 0.5%.

“This 4-year transaction represents the tightest spread to swaps, spread to German reference bond and lowest reoffer yield for Slovenia to date. The 2026 maturity was selected as it aptly fit Slovenia’s redemption profile,” said the ministry.

The 40-year benchmark priced with a reoffer spread of MS+75 basis points, offering a reoffer yield of 1.183%, equivalent to a +92.8 basis points spread to the DBR 0%.

“This maturity was strategically selected having debt maturity profile in mind while locking in attractive borrowing costs with rates continuing to be low in a historical context,” said the ministry.

The final spreads were set as the books reported over EUR 5 billion in demand for the 4-year bond, excluding the joint lead managers’ (JLM) interest and over EUR 1.6 billion for the 40-year bond (excl. JLM interest).

The bond offering was jointly led by Barclays, BNP Paribas, Commerzbank, Deutsche Bank, Goldman Sachs Bank Europe SE and J.P. Morgan.

Investors in the 4-year bond are mostly from the UK and Ireland and France and Benelux countries. They are predominately asset and pension fund managers and insurance companies. Most of the investors in the 40-year bond are from Germany, Austria and Switzerland with 81.5% of them being asset managers, insurers and pension funds.

The ministry noted that The Economist ranked Slovenia among the Covid-19 pandemic winners, a reference to the British weekly raking the country second among 23 selected OECD nations in terms of how well it has coped with the economic aspects of the Covid-19 crisis.

“The efficacy of the government policies is also being confirmed by the stability of Slovenia’s credit ratings during the pandemic,” reads the release.

Overall, the treasury is expected to borrow EUR 5.05 billion this year, according to a budget financing programme adopted by the government in early December.

Last year the treasury also tapped the market in early January, when it issued a new ten-year bond to the tune of EUR 1.75 billion and extended the existing 30-year bond issue by another EUR 250 million. Another round of borrowing ensued in late January.

Several other European countries also issued bonds today, including Italy, Germany and Spain.