Nova Ljubljanska Banka d.d., Slovenia’s biggest bank, is planning to sell corporate debt for the first time since since 2010 as the nation’s borrowing costs fell to a record.
NLB, as the state owned bank is known, may sell euro-denominated bonds after investor meetings, which start June 17, Mojca Strojan, spokeswoman for the NLB, said in e-mailed response to questions. NLB last sold notes in euros in May 2010, according to data compiled by Bloomberg.
Slovenia’s biggest bank is following Petrol Group d.d. in selling corporate bonds as sovereign yields dropped after the Adriatic nation recapitalized its banking industry last year and avoided seeking a bailout. A corporate debt issuance would be an “important symbol of going back to normal business”, NLB Chief Executive Officer Janko Medja said in an interview in April.
“Placing this bond makes perfect sense as there is the marketing effect of not being reliant on European Central Bank money anymore,” Gunter Deuber, head of research at Raiffeisen Bank International AG in Vienna, said in response to questions from Bloomberg News. Apart from the possibility of a longer tenor compared with ECB funding, the debt sale also helps the company in developing its investor base, Deuber said.
NLB has picked Bank of America Merrill Lynch, Commerzbank AG and UniCredit SpA to organize the meetings, according to a person familiar with the offering, who asked not to be named as the information is private.
Proceeds from the possible sale “would be spent on general financing, diversification of funding sources and replacing some costlier” loans, Strojan said. A sale would also improve the bank’s profile on the international financial markets, she said.
Slovenian banks, including NLB, have repaid 29 percent of the ECB loans by the end of March and need to make 2.6 billion euros of long-term debt repayments in the first quarter of 2015, the central bank said May 27. The ECB, in a bid to get credit flowing to the economy, opened a 400 billion-euro liquidity channel for European banks, when its president Mario Draghi unveiled historic measures June 5 to fight a threat of deflation.
The yield on Slovenia’s euro-denominated debt maturing in 2024 slumped to the lowest level since the debt was sold in 2009. It fell four basis points, or 0.04 percentage point, to 2.976 percent at 5:59 p.m. in Ljubljana, according to data compiled by Bloomberg.
Petrol Group is today selling 265 million euros ($359 million) of five-year securities at a yield of 3.4 percent, according to a person familiar with the offering, who asked not to be named as the information is private. Petrol announced June 5 a possible bond sale after it received a credit rating from Standard & Poor’s.
Nova Ljubljanska, which received 2.17 billion euros in state aid, recorded a profit of 28.6 million euros in the first quarter. It posted a 1.44 billion-euro loss in 2013, according to data compiled by Bloomberg.
The bank on June 10 got a BB- credit rating from S&P, with a negative outlook.