The fundraising was highly successful, as the bonds were issued at a somewhat lower level than market participants had expected, said SEB capital markets broker Erik Laur in a press release.

In total, there was more than €1.5 billion in demand for Estonian government bonds, indicating an oversubscription of more than six times.

The strong interest was supported by the fact that Estonia is one of the few Baltic countries issuing bonds with such short maturities, Laur said.

The last auction took place in September 2024, when the state borrowed for six months and one year at average yields of 3.172 percent and 2.862 percent, respectively.

Given the decline in borrowing costs, Estonia secured cheaper financing than in September, Laur said.

Estonia's sovereign risk has decreased, he noted.

"This is reflected in our borrowing cost compared to Germany. For example, the yield spread on Estonia's 2034 government bond has narrowed. While at the end of September last year, our nine-year bond traded at a yield one percentage point higher than the equivalent German bond, the yield gap has now fallen to 0.75 percentage points," the broker added.

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