BRATISLAVA, November 22, (WEBNOVINY) – Slovakia ultimately did not borrow a single cent in Monday’s regular auction of government bonds. The Finance Ministry’s Debt and Liquidity Management Agency (ARDAL) rejected all bids of EUR 66.9 million for securities maturing in 2026. Director of ARDAL’s debt service coverage department Tomas Kapusta explained that investors required high yields. Moreover, Slovakia has already acquired enough funds to cover cost of debt service coverage for a relatively long period.
Kapusta specified that the agency rejected the bids because it has already issued a relatively high number of bonds and obtained funds to cover even part of next year’s cost. However, he rushed to explain that ARDAL disliked the required yields either. The difference in credit-default swaps on Slovakia’s 10- and 15-year bond was much higher from other countries. “They really demanded an overly high yield,” stressed Kapusta.
Investors demanded average interest rate 5.0036 percent p.a. in the 20-year government bonds. The minimum interest rate was 4.7292 percent p.a. on a maximum of 5.1499 percent p.a. For comparison, Slovakia sold securities for EUR 2 billion for accepted rate of 4.373 percent p.a. in syndicated auction of 15-year benchmark bonds.
Based on the ARDAL’s regular schedule, the Monday’s government bond auction was supposed to be the last one this year. However, Kapusta stated that one more auction will be held in December. Banks asked for one more auction of the newly launched three-year bond with a variable coupon bound to EURIBOR.
Until now, Slovakia obtained more than EUR 6.9 billion from bond auctions, including EUR 2 billion from the 15-year benchmark bonds and EUR 1.5 billion from a ten-year benchmark auction from April 2010. In addition to this, ARDAL also sells T-bills.
Last year, ARDAL sold government bonds for EUR 4.208 billion in 24 auctions; EUR 284.2 million worth went to foreign investors. Total demand in these auctions reached EUR 12.334 billion. ARDAL also floated a Eurobond issue of EUR 2 billion on foreign markets and restarted the issuing T-bills.
SITA
