Slovakia to Sell 12-Year Eurobond to Benefit From Yield DeclineLyubov Pronina and Radoslav Tomek
Slovakia is looking to tap international markets for a benchmark-sized euro-denominated bond as soon as this week to lock in lower yields before an expected tightening of U.S. monetary policy.
The sale of the 12-year note will be organized by Ceskoslovenska Obchodna Banka, a unit of KBC Groep NV, Societe Generale CIB and Slovenska Sporitelna, a unit of Erste Group Bank AG, debt-management agency Ardal said by e-mail. Slovakia, which raised 1.5 billion euros ($1.8 billion) for a 15 year note in its last international offering a year ago, plans to sell 5.1 billion euros this year, Ardal said Jan. 7.
Slovakia, which adopted the euro in 2009, aims to benefit from record-low yields driven by fiscal consolidation. The nation’s borrowing costs over 10 years more than halved in the past 12 months to 1.13 percent, according to generic rates compiled by Bloomberg. The Federal Reserve last month said it would be “patient” in raising rates from near zero, with Chair Janet Yellen seeing an increase unlikely before late April.
“Slovakia is re-opening the primary markets” in central and eastern Europe, Richard Segal, head of emerging-markets credit strategy at Jefferies International Ltd. in London, said by e-mail. “Slovakia is an infrequent issuer in the dollar or euro sector. This, coupled with the single-A rating, suggests the deal should go well.”
The sale may take place as early as this week, according to a person familiar who asked not to be identified because the details are private. The syndicated transaction is expected to be priced soon, the debt-management agency said by e-mail.
The country is rated A2 by Moody’s Investors Service and A by Standard & Poor’s, the sixth-best grade at both rating companies. The full-year state budget deficit was 2.9 billion euros in 2014, Finance Minister Peter Kazimir said Jan. 2, less than the approved limit of 3.3 billion euros.
Turkey last week raised $1.5 billion selling more of its 2043 bonds to yield of 4.95 percent in a deal that was three times oversubscribed.