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High demand from international investors for Estonia’s government bond issue

3. June 2020 - 18:50

Estonia’s issue of 10-year government bonds on Wednesday, returning to the market for the first time since 2002, resulted in very high demand from investors. 280 institutional investors from all over the world placed EUR 7.7 billion of orders for the bonds.

Given this high level of interest, the Ministry of Finance decided to increase the size of the bond issue from EUR 1 billion to EUR 1.5 billion. The coupon is 0.125%. The bonds will mature in June 2030 and the yield to maturity is 0.235% per annum.

According to the Minister of Finance, Mr Martin Helme, the result of the bond issue was excellent. "International institutional investors have shown extremely high interest to buy our bonds and, as a result, we have managed to issue them at an extremely favorable interest rate level. This is a big vote of confidence by international investors in Estonia – its government finances, its economic situation and its prospects for the future," Mr Helme said.

Following Wednesday's successful bond issue, Estonia may consider one or two further government bond issues over the course of 2020 and 2021, Mr Märten Ross, Deputy Secretary General of the Ministry of Finance said. "International capital markets have received this bond issue well and this gives us confidence in planning future issues. The government expects to need additional borrowing in the coming years and today’s bond issue demonstrates that we now have a choice of instruments: long-term loans, T-bills and now government bonds," Mr Märten Ross said.

This issue of a so-called benchmark-sized government bond is also an important step in the development of Estonian capital markets. Estonia had been the only Eurozone member without a government bond issue outstanding. With this issue, there is now a clear pricing reference point for Estonian banks and companies considering their own bond issuance.

Citibank, Société Générale and Nordea Bank were the lead managers for the bond issue. The bonds will be listed on the Euronext Dublin exchange.

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