BRATISLAVA, February 25, (WEBNOVINY) – Last year was one of the most successful years in the history of Slovakia regarding the state debt management, in spite of the global crisis. Head of the Finance Ministry’s Debt and Liquidity Management Agency (ARDAL) Daniel Bytcanek reported that total expenditures connected with the debt service in relative expression reached the historical low. Slovakia’s debt and deficit were covered with sources borrowed at an average interest rate of 3.3 percent p.a.
Bytcanek further reported that the debt structure improved in particular through syndicated long-term issues and by the end of the year, all risk criteria defined in the Strategy of Debt Management had been met. In 2009, the average interest rate on issued bonds was higher by approximately 0.6 percentage points.
According to analyst of Volksbank Slovensko Vladimir Vano, the development confirms that Slovakia benefited from a good timing of euro adoption in the last two years. After the eurozone entry, Slovakia has become focus of a wider circle of investors, including Asian central banks, for which Slovakia’s euro bonds have become reserve assets that they buy within diversification of their FOREX reserves between euro and dollar assets. Thanks to the euro, Slovakia is able to borrow money at lower interest rates than if it borrowed in crowns, in particular during the difficult last two years on the global bond market.
ARDAL head went on to say that this year, a growth of interest rates is expected, along with a general worsening of the market situation. The level of Slovakia’s risk surcharge this year will depend also on the development of public funds and related rating.
Last year, ARDAL raised EUR 7.094 billion in bond sales to cover the state debt and to provide liquidity. This represented a significant increase from the EUR 4.208 billion obtained in 2009. The increase was caused by a higher need to refinance the state budget deficit. Last year’s sale included also the EUR 3.5 billion from a syndicated sale of two issues of benchmark bonds from April and October of last year. The agency sold T-bills worth EUR 2.421 billion last year, too, up from EUR 1.259 billion a year ago.
SITA