Slovenia: Second EUR 1.25 bn 10-year Sustainability Bond offering
On Wednesday, 4th January 2023, the Republic of Slovenia, rated A3 (stable) /AA- (stable) /A (stable), successfully entered the markets with a EUR 1.25bn 10-year Reg S Sustainable bond alongside a EUR 250mm tap of the outstanding 3.125 percent bonds due 7 August 2045. This landmark transaction, which included the second and largest Sustainable bond out by Slovenia, makes the Republic of Slovenia the first Sovereign in the region to enter the markets in 2023.
The success of the transaction, with over EUR 10bn of combined demand, is a strong testimony of the confidence institutional investors have in the Republic of Slovenia, and particularly in its role in financing and achieving high environment and social goals.
The transaction priced at 5:03 pm CET. The new EUR 1.25bn 10-year Sustainability offering priced with a coupon of 3.625 percent and a reoffer spread of 10y MS+77bps, offering a 3.654 percent reoffer yield, whilst the reopening of the August 2045 bonds priced with a reoffer spread of MS+137bps, representing a 3.922 percent yield.
On Tuesday, 3rd January 2023, at 11:00 CET and on the back of stable market conditions, Slovenia announced the mandate for its second Sustainability Benchmark bond offering concurrent to a tap of Slovenia’s 3.125 percent outstanding bonds due 7 August 2045. That same day, Investors were also invited to join a presentation of the country’s updated Sustainability Bond Framework at a Global investor call at 2:00 pm CET, as well as to select 1-on-1 investor calls.
After gathering supportive investor feedback, books were opened the following morning, on Wednesday at 9:03am CET with initial guidance of MS+90bps area and MS+145bps area for the 10-year and 2045 reopening respectively, representing a 17bps concession to the issuer’s existing curve for both.
Before noon CET, investor orders were already in excess of EUR 5.5bn (including EUR 350mm JLM interest) and EUR 1.7bn (including EUR 25mm of JLM interest) respectively, allowing Slovenia to revise the 10-year spread down to MS+80bps (+/- 3bps WPIR) and MS+140bps (+/- 3bps WPIR) for the tap.
Books shortly peaked above EUR 7.8bn (including EUR 470mm JLM interest) for the 10-year (March 2033) bond and EUR 2.9bn (including EUR 45mm JLM interest) for the 2045 tap, allowing Slovenia to launch the transaction at the tighter end of the ranges and set the spreads at MS+77ps and MS+137bps respectively, at 12:51pm CET.
BNP Paribas, Citi, Deutsche Bank, Erste Group (B&D), Nova KBM and UniCredit jointly led the offering. BNP Paribas acted as sole sustainability structuring advisor on the update of Slovenia’s Sustainability Bond Framework.
The proceeds from Slovenia’s Sustainability Bond will fund government investments that contribute positively to the Republic’s environmental and social goals, and further promote and develop the domestic and international green, social and/or sustainability bond market. Slovenia’s Sustainability Bond Frame can be found on the web page for investors.
28 percent Germany / Austria / Switzerland
19.8 percent France / Benelux
13 percent UK / Ireland
11.5 percent Slovenia
9.4 percent Southern Europe
7.7 percent Scandinavia
6.2 percent CEE
2.3 percent Rest of World
2.1 percent Other Europe
Tap of 2045s
24.5 percent Germany / Austria / Switzerland
19.2 percent UK / Ireland
16.3 percent Southern Europe
14.0 percent Slovenia
10.4 percent Scandinavia
8.0 percent Other Europe
3.5 percent France / Benelux
2.2 percent Rest of the World
1.9 percent CEE
50 percent Asset Manager/ Pension Fund / Insurance
36.8 percent Bank / Private Bank
10 percent Central Bank / Official Institution
3.1 percent Hedge Fund
0.1 percent Other
Tap of 2045s
46.6 percent Asset Manager/ Pension Fund / Insurance
40.8 percent Bank / Private Bank
6.8 percent Hedge Fund
5.6 percent Central Bank / Official Institution
0.2 percent Other