Slovenia pre-funds with new issuance

Slovenia pre-funds with new issuance

Published: October 31, 2014

Sovereign raises €1bn in seven-year paper priced with a 2.25% coupon.

Slovenia has returned to the eurobond market, raising €1bn (US$1.25bn) with seven-year paper, allowing the government to begin pre-funding for 2015 and 2016.

The deal attracted orders of €3.2bn from more than 275 accounts, and was sold with a coupon of 2.25%, compared to the 3% coupon with which the sovereign raised €1bn of seven-year debt in April.

Barclays, Credit Agricole, Deutsche Bank and JP Morgan ran the deal.

The issuance succeeded despite the news that two of the three Slovenian banks to undergo stress tests organised by the European Central Bank failed. Under a hypothetical baseline and three-year adverse scenario, NLB and NKBM would show a low capital shortfall.

Slovenia’s ministry of finance said in a statement: “Measures taken and the effects of restructuring in 2014 improved profitability, so that the identified capital shortfall will be covered by retained earnings.”

In a research note, Raiffeisen Bank International analyst Stephan Imre wrote: “Although two leading Slovenian banks failed the [stress tests] in line with expectations, their recapitalisation needs turned out to be lower than some market participants feared. Favorable local market conditions did therefore not deteriorate after the release and Slovenian debt managers took the window of opportunity to tap the local market.”