The government plans to issue €1 billion worth of bonds with a maturity of 10 years which will be listed on the Dublin Stock Exchange. This will be the first time long-term bonds have been issued by Estonia for 18 years.
The Ministry of Finance has given a mandate to Citigroup, Nordea and Societe Generale to find institutional investors.
A meeting introducing the issuance of bonds to investors will take place on June 2, a statement published by the Ministry of Finance's website said on Tuesday. In addition to the planned 10-year bond issue, the state plans to organize one or two similar bond issues in the coming years.
The interest rate of the bonds will be determined at the time of issue and will depend on both market interest rates and investor demand, a statement from the ministry said.
Minister of Finance Martin Helme (EKRE) said: "The Estonian state will issue long-term bonds for the first time after an 18-year break. Our public finances are in good condition, the volume of Estonia's public debt is one of the smallest in the European Union."
He continued: "The government's liquidity reserve must be large enough to ensure that state payments are made even in difficult times. The proceeds from the sale of the bonds will be used to finance both the state budget and the supplementary budget adopted in April."
Helme said the state would not have had to issue the bonds now if there had not been an emergency situation due to the coronavirus. "In order for the state to have enough money to cover its expenses, we have to take on additional debt obligations in the current difficult economic situation," he added.
Estonia has been assigned a credit rating by the agency S&P at AA-, Moody's A1 and Fitch AA-.
Editor: Helen Wright