Estonia issues €400 million worth of short-term bonds

The "Superministry" complex in Tallinn, which houses the finance ministry. Source: Siim Lõvi/ERR

Estonia on Tuesday, March 30, auctioned €400 million worth of bonds with a term of 12 months.

Seven dealers participated in the auction, it appears from the framework of short-term bonds of the Ministry of Finance. The average yield to maturity was -0.441 percent, the highest yield with which the bonds were allocated was -0.43 percent.

The framework of short-term bonds established by a directive of the minister of finance enables the Treasury to operatively attract funds from the bond market and smooth the fluctuations of daily cash flow.

The framework provides for the repeated issuance of discounted or issue premium bonds with a maturity of up to 12 months, the cost of which depends on the market conditions at the time of issue. The maximum limit for short-term bonds is €2.5 billion.

No regular auction calendar is set up to issue the bonds, the issues take place to cover the need for real cash flow.

No bond issue under the framework is a public issue. The bonds are intended only for professional investors. The bonds will be registered with the Estonian Depository of Nasdaq CSD SE, no listing on the stock exchange is planned, as the bonds will be sold to professional market participants.

According to the law, the bond framework is not registered with the Financial Supervision Authority.

Based on the cooperation agreement, the dealers of short-term bonds are AS LHV Pank, AB SEB bankas, Swedbank AS, Luminor Bank AS, OP Corporate Bank, Erste Group Bank AG and Nordea Bank Abp.

Previously, the Treasury issued 6- and 12-month bonds worth €375 million on May 6 last year and €200 million worth of bonds in March of the same year, also in tenors of six and 12 months.

In June 2019, €200 million worth of bonds with terms of six, nine and 12 months were issued, and in May a 7-day issue in the amount of €4 million was carried out to identify potential operational risks.


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Editor: Helen Wright

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