On Tuesday, September 17, the State Treasury issued seven-year Eurobonds in the international financial markets on behalf of Latvia in the amount of EUR 600 million. The maturity date of the bonds is January 24, 2032. The bond yields 3.138% and the coupon rate is 3%.
Investors’ demand for Latvian bonds has reached a historically high level – almost five billion euros, the State Treasury notes.
Also, the number of investors was one of the largest – 140 investors from various European countries, including Germany, Austria, Great Britain, Ireland, the Nordic countries, and Switzerland, bought securities.
The leading banks of the issue were “BNP Paribas”, “Deutsche Bank” and “Erste”.
State Treasury Manager Kaspars Āboliņš said in an interview with the LETA agency in September of this year that the state will have to borrow at least three billion euros annually for the next four years, as it will be necessary to refinance a series of previously issued Eurobonds, as well as to finance the budget deficit and loans to local governments.
“The need for borrowing in the coming years is quite large, as it is necessary to borrow not only to refinance Eurobonds, but also to finance the budget deficit and loans to municipalities. The total planned borrowing volumes for the next four years are at least three billion euros annually. Of course, it also depends from what kind of budget deficit will be approved in the end, how the tax revenues will be fulfilled,” said Āboliņš.
He explained that it is planned to attract this money with various instruments, but mainly it will be bond issues in the international financial markets in euros or US dollars, similar to what the State Treasury already did this year.
Previously, Latvia borrowed in the international financial markets in May 2024. Latvia priced 10-year bonds in the amount of 1.25 billion US dollars, returning to the US capital market after a 12-year break. Bonds maturing on July 30, 2034 were priced with a credit risk premium of 83 basis points above the benchmark rate or US Treasury bonds, with a yield of 5.252% and a coupon rate of 5.125%.
In order to prevent the currency risk, a currency swap transaction was concluded at the same time as the bond issue, converting the actual state debt obligations into euros.
(Added paragraphs 6-8.)
2024-09-25 04:48:16