Published: June 17, 2009
Lithuania has successfully tapped international capital markets with a €500mn benchmark 5-year Eurobond transaction due 2014, with an annual coupon of 9.375%.
The issue was oversubscribed, with orders coming from a large number of accounts, including the US, Germany, the UK, and Scandinavia. Citibank, Credit Suisse and RBS were the lead managers.
"The successful completion of this Eurobond issue demonstrates a strengthening of investor confidence in Lithuania, and a favourable view of our government’s fiscal policies," said Lithuanian Prime Minister Andrius Kubilius.
"Markets are still twitchy and investors are looking for relatively high yields. However, this transaction indicates that there is positive sentiment. It is a needed injection of new money into the Lithuanian economy, which also reduces the government's financing requirements for the remainder of 2009," Kubilius added.
The secondary market yield of the 2016 Lithuanian Eurobond on the day of pricing of the new issue was around 9.2- 9.8%. However, only small trades were done at these levels. For larger volumes, and in order to attract investors to the new issue, it was necessary to offer a slight premium to the yield quoted in the secondary market.
Minister of Finance, Algirdas Šemeta, said in a statement: “The situation in the financial markets is not stable yet, and the yields expected by investors remain on a relatively high level. Still, the fact that the Eurobond issue was possible is a very positive sign both for us and other Central and Eastern European countries. It is also important to emphasise, that this is a new cash injection into the Lithuanian economy, which is really needed at the current juncture in time,” Šemeta stated.
The last time Lithuania accessed the international capital markets was at the end of 2007.