With its bookrunners claiming to have received orders totaling €2.2bn, Slovakia on February 20 tightened the price on a €1.75bn 10-year benchmark Eurobond issue to a yield of 3.13%, as it closed the books on yet another big leap onto the emerging market rally.
Continuing its rapid drive to leverage the emerging market bond rally, Slovakia mandated banks for a long-dated, euro-denominated issue on February 19. According to sources cited by newswires, lead managers gradually revised an original guidance price of mid-to-high 120s over mid-swaps to around 122 basis points.
With the economy slowing rapidly from its better-than-expected performance throughout the first three quarters of 2012, and the government struggling to tap the revenue needed to meet fiscal targets, Bratislava has not been slow this year to follow up its relatively huge borrowing in 2012. Analysts expect the country's yields to start moving out, as slowing growth in the country meets a pullback in appetite for emerging market debt.
Debt agency Ardal saw just that on February 18 as it sold €430.2m in three- and four-year bonds at an auction. Yields on the four-year paper in particular - a reopening of a January issue - moved out significantly. The average yield at the last auction on January 21 stood at 1.0870%, according to Dow Jones, but the paper was sold at an average of 1.3795% just a month later.
Last year, Slovakia both fulfilled its €7.5bn borrowing needs - hitting record low yields along the way thanks to the liquidity provisions of the Fed and the European Central Bank - and secured around one-third of its 2013 issuance target. As early as January 8, it was back out in the market, as debt agency Ardal sold a €1.5bn 3.875% 20-year paper, as it seeks to reap an €8bn borrowing target for 2013.
Ardal director Daniel Bytcanek described a 10-year Eurobond as "the missing point on our curve" last month. He added: "We would want the final size of that bond to be €3bn, but we probably won't sell that all in one go. First we will do a syndicated deal of around €1.5bn and then add another €1.5bn slowly via auctions."
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