Slovenia takes out EUR 2 billion in fresh debt

Ljubljana – Slovenia issued on Tuesday a new 10-year bond of EUR 1.75 billion and extended the existing 30-year bond issue by another EUR 250 million. This is the first time it issued a bond with a negative yield to maturity. “For the first time in its history Slovenia issued today a long-term bond with a negative yield to maturity,” the Finance Ministry said.

The news follows the ministry’s yesterday’s announcement that it had commissioned the banks Barclays, BNP Paribas, Credit Agricole CIB, Deutsche Bank, HSBC and NKBM to manage the issue of a new bond due in 2031 and the increase of the 30-year bond due in 2050.

Slovenia issued the 10-year bonds with a negative yield to maturity rate of -0.096% and a zero coupon rate, which means it would not have to return EUR 17 million, the ministry explained in today’s press release.

The business newspaper Finance meanwhile cited Bloomberg in reporting that demand for the ten-year bond exceeded EUR 10.6 billion.

The increase by EUR 250 million in the 30-year euro-denominated bond issue was meanwhile made at an interest rate of 0.381%, the ministry said. Finance added that the demand exceeded EUR 250 million.

The ministry said both of today’s issues reflected investors’ long-term confidence in Slovenia and the confidence in the decisions taken by the government during the demanding coronavirus times.

Slovenia most recently tapped into international financial markets in October 2020. Finance at the time reported that the treasury took out roughly EUR 6 billion in fresh borrowing through various new and expanded bonds, not including treasury bills. The bulk was needed to finance relief and stimulus measures amid the Covid-19 pandemic.

To implement this year’s state budget, the country would need to borrow EUR 5.67 billion, under the budget financing programme adopted by the government last month. Public debt would thus increase to EUR 36.62 billion, or 75% of the country’s GDP.