The Republic of Slovenia: US$1bn 5.000% 10-year 144A/Reg S Bond offering

13. 9. 2023

On Tuesday, 12th September 2023, the Republic of Slovenia, rated A3 (stable) / AA- (stable) / A (stable), successfully entered the markets with a US$ 1bn 10-year 144A / Reg S bond. This landmark transaction represents the return of Slovenia to the US$ market for the first time since 2014. The success of the transaction, with over US$ 3.8bn of demand (including JLMs interest), is a strong testimony of the confidence institutional investors have in the Republic of Slovenia. Barclays, BNP Paribas, Citi, Deutsche Bank, Goldman Sachs Bank Europe S.E. and J.P. Morgan jointly led the offering.

The transaction priced at 18:34 CET. The new US$ 1bn 10-year offering priced with a coupon of 5.000% and a reoffer spread of CT10+80bps, representing a 5.086% reoffer yield and reoffer price of 99.332%.

On Thursday 7^th September 2023, at 11:52 CET and on the back of stable market conditions, Slovenia announced the mandate for its US$-denominated benchmark 144A / Reg S 10-year bond offering, with the global investor call as well as several 1-on-1 investor calls taking place thereafter over the course of Thursday and Friday.

After gathering supportive investor feedback during the course of the virtual marketing exercise, books were opened on Tuesday morning, 12th September 2023 at 09:37am CET with initial price thoughts of CT10+100bps area for the new US$ benchmark 10-year.

Books grew steadily, reaching $2.2bn+ (including $200mm orders from JLMs), allowing Slovenia to revise price guidance down to CT10+90bps area at 13:19 CET, just ahead of US markets opening.

The move was well received, and books continue growing, peaking in excess of $3.85bn (including $200mm of JLM orders) as of 16:10 CET, allowing the Republic to launch the transaction at a final spread over Sovereign of CT10+80bps for a $1bn transaction.

The transaction represents Slovenia’s return to the US$ market after a nearly 10-year absence, and it also represents the first US$ bond by a CEE issuer in the Eurozone since 2014.

For the purpose of hedging against the movement of the exchange rate of the US dollar against the euro, a currency swap was implemented in the entire value of the issue. The actual cost of financing the state budget by issuing a dollar bond after currency exchange is 3.802%.

The issue of the bond of the Republic of Slovenia is of great strategic importance from the point of view of Slovenia's position on the capital markets.

Geographical distribution:

37 % UK / Ireland

31 % Continental Europe

29 % North America

3 % Asia / Middle East

Institutional investor distribution is follows:

62 % Asset Manager

15 % Banks / Private Banks

12 % Insurance / Pension Fund

6 % Hedge Fund

4 % Official Institutions

1 % Other