By issuing a new bond the Republic of Slovenia carries on with its successful debt refinancing and reduction of interest expenditures
On 7 January 2020, the Republic of Slovenia successfully refinanced the bond maturing on 27 January 2020 by issuing a new €1.5 bn 10-year bond.
The bond carries a coupon of 0.275%, which is by 3.85 percentage points lower than the coupon rate of the maturing bond. The coupon rate’s difference is supposed to positively affect budget savings. All in all, Slovenia has been continuously taking advantage of the low interest rate environment for favourable debt refinancing.
In general, the first quarter of the year is a period when the majority of countries are looking for financial sources to refinance their debt and to finance budget needs for the current year. This year, Slovenia followed the steps of the previous years by taking the bold decision to enter the Euro financial market with a syndicated bond issue, thus being the first country among the Eurozone ones. The extremely high demand in excess of €11 bn showed that investors acknowledged Slovenia's strong credit as well as the strength of its economy and fiscal policy.
The transaction priced at 16:24 CET at a re-offer price of 99.793% (re-offer yield of 0.296%) with a coupon rate of 0.275%.
In light of favourable market conditions initial price thoughts of MS + 30 bp area were released at around 9:30 CET. The demand rocketed, and at around 10:30 CET books were officially opened and the price guidance of MS + 25 bp area was released to the market. At 11:30 CET the spread and size were fixed at MS + 19 bp and €1.5bn, respectively. The order book closed at around 12:00 CET in excess of €11 bn.
Barclays, BNP Paribas, Goldman Sachs International Bank, HSBC, JP Morgan and UniCredit Banka Slovenija jointly led the offering.
The geographical and institutional investor distributions were as follows:
- 28% United Kingdom & Ireland
- 14% Germany & Austria
- 13% Slovenia
- 11% Nordics
- 9% Rest of Europe
- 9% Asia
- 8% France
- 6% Benelux
- 2% Americas
- 52% Fund Managers
- 18% Pension Funds/Insurers
- 14% Banks/Treasuries
- 12% Central Banks/Official Institutions
- 4% Hedge Fund
The Financing Programme for 2020 namely specifies the financing quota for the Budget of the Republic of Slovenia in the amount of €1.58 bn.