Sven Kirsipuu, deputy secretary general at the Ministry of Finance, said: "The interest of international investors in Estonian bonds was high yesterday, meaning the result was the most favorable possible interest rate.

"In recent months, bond interest rates and risk margins have risen strongly, and the difficult market situation determined much. At the same time, we need to be certain that we have a sufficient financial buffer to cover the budget state payments both at the end of this year and next year," Kirsipuu went on.

In 2020 Estonia issued 10-year bonds to a total value of one billion euros; the interest rates of these bonds was 0.125 percent per annum at that time, but is now 4 percent, meaning a 32-fold increase.

In March 2021, the government announced to issue another round of short-term bonds later on this month, for the third time in preceding year and ostensibly in response to the Covid pandemic.

The bonds were listed on the Dublin Stock Exchange, and the three rounds were the first time the government had issued bonds for nearly 20 years.

Investor interest was high in the context of the nervous market situation of recent times, while 93 international investors wanted to subscribe to the bonds, to a total of €1.8 billion, the finance ministry says.

Proceeds from the bonds will be used to cover the deficit of the general state budget and supplement the liquidity reserve, while the projected, continued state budget deficit means similar issuing rounds can be expected in the future as well. 

The 2023 state budget has the state's debt burden estimated to rise to 19.8 percent of GDP next year. Government sector debt will increase by €780 million, to €7.65 billion, in 2023.

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