Estonia borrows €1.5 billion in bonds

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Euros (photo is illustrative).
Euros (photo is illustrative). Source: Siim Lõvi/ERR

The Ministry of Finance decided on Wednesday to increase the volume of ten-year Estonian bonds listed on the Dublin Stock Exchange to €1.5 billion. It was originally planned to borrow €1 billion.

Due to high interest in the government bonds the Ministry of Finance decided to increase the volume of the bond issue. A total of 280 international investors wanted to subscribe to bonds worth €7.7 billion. 

The interest rate on the ten-year bonds was 0.125 percent per annum. The maturity date of the bonds is June 2030 and the yield to maturity is 0.235 percent per annum.

Minister of Finance Martin Helme (EKRE) said the money received from the sale of bonds will be used to finance both the state budget and the supplementary budget adopted in April.

Märten Ross, Undersecretary for Financial Policy and Foreign Relations at the Ministry of Finance, said one or two similar issues will be considered this year or next.

"Our issue was very well received by the international financial markets and it also provides certainty in planning the next possible issues. The need for additional financing is likely to exist in the country in the coming year, and it is good that we can choose between different financial instruments, such as a long-term loan, a long-term bond or a short-term bond," Ross said.

Appearing later on Wednesday on ETV current affairs show "Aktuaalne kaamera", Ross said that interest had come both from the U.S. and Europe, as well as Estonia, meaning the bond issue was oversubscribed.

"The over-subscription was greater than we thought it would be a few days ago, but given the significant interest in our bond issue, this wasn't a big surprise considering our credit background and debt value. /.../ We obtained a price level that can be considered around about a good result , and more than the level for Eastern or Central Europe," he added.

The main organizers of the bond issue were Citibank, Societe Generale and Nordea Bank. 

Last month, Helme 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.

"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."


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Editor: Helen Wright

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