BRATISLAVA, November 28, (WEBNOVINY) — Slovakia has again felt the consequences of turbulence on financial markets when it needed to borrow to service its debt. Demand for Slovak government bonds maturing in 2014 was very low in Monday’s auction again when investors showed interest in securities only worth EUR 30 million. Finance Ministry’s Debt and Liquidity Management Agency (ARDAL) sold bonds valued at EUR 28 million at an average interest rate of 3.4642 percent p.a.
The auction on Monday thus resembled the government bond auction two weeks ago, where demand only reached EUR 13 million and foreign investors have again expressed no interest. ARDAL’s head Daniel Bytcanek said after the previous unsuccessful auction that the weak demand reflected the situation in Europe, in particular in Italy and Slovenia. However, foreign investors’ lack of interest has been confirmed again this time.
ARDAL debt management section head Tomas Kapusta opines that the reason for the limited interest in auctioned bonds could also be the deepening debt crisis as well as approaching end of the year and possible adjustments in balance sheets of individual investors. In any case, such continuing lack of interest in government bonds could cause trouble for Slovakia. Kapusta thinks that some measures at the European level will be necessary.
Financing of the Slovak debt is not at risk yet after last two unsuccessful auctions of Slovak government bonds. The agency has gradually been borrowing sources for financing of next year’s liabilities since September. “We will have something prefinanced for next year,” said Kapusta and added that the state may have to restore issuing T-bills representing a short-term alternative to service the state debt and provide liquidity.
This year, Slovakia has sold government securities for over EUR 4.8 billion, whereof securities worth EUR 250 million were issued into the portfolio of the Finance Ministry. In addition to this, ARDAL has sold T-bill worth almost EUR 900 million.
Last year, ARDAL raised EUR 7.094 billion in bond sales to cover the state debt and to provide liquidity. This represented a significant increase from the EUR 4.208 billion obtained in 2009. The increase was caused by a higher need to refinance the state budget deficit. Last year’s issues also included EUR 3.5 billion syndicated sale of two issues of benchmark bonds from April and October. The agency sold T-bills worth EUR 2.421 billion last year, too, up from EUR 1.259 billion a year ago.
SITA