Caption: Finance Minister Peter Kažimír said the debut of Slovak state bonds on the Japanese market was a success. (source: SME)
FOR THE first time in its history Slovakia has sold state bonds on the Japanese market. In doing so, the country continued the diversification of its debt. In the past, Slovakia has sold bonds denominated in Swiss francs, Czech crowns ands US dollars, as well as in euros. The Slovak government said it regarded the sale of bonds in Japan as a great success, particularly in light of the fact that it was entering the Japanese market for the first time ever.
“Of all the countries which have ever debuted on this market, Slovakia achieved the lowest revenues, which means the best conditions from the viewpoint of price,” Finance Minister Peter Kažimír said, as quoted in a Finance Ministry press release. “These results serve as the best evidence of the confidence that foreign investors have in the reform efforts of the government and the tenable consolidation of the public finances.”
Slovakia sold two types of bonds, worth a total of JPY29.8 billion (€235 million). They were the first Slovak bonds ever denominated in Japanese yen. Sales of the first type of bond, payable on June 24, 2016, with a 0.72-percent coupon rate yielded JPY25.8 billion. The remaining JPY4.2 billion was raised from a second bond payable on June 25, 2018, with a 0.99-percent coupon rate.
These issues are the result of two trips to Japan by Kažimír, in 2012 and earlier this year. Both issues were offered exclusively to Japanese investors from different market sectors: banks, insurance companies and property administration companies, most of which were buying Slovak bonds for the first time, the TASR newswire wrote, citing information provided by the Slovak Debt and Liquidity Management Agency (ARDAL) and the Finance Ministry.
Slovakia has become the ninth central European state to issue so-called Samurai Bonds, with the Slovak issue representing the second-biggest debut among all these states.
Daniel Bytčánek, the head of ARDAL, gave two reasons for offering bonds to Japanese investors. He said the price was not the most important reason, as Slovakia is able to borrow under similar conditions at its regular auctions, according to the Sme daily. Instead, ARDAL hopes that Japanese investors might in the future buy Slovak bonds denominated in euros. It also sees Japan, after the USA, as the country with the second biggest investor potential in the world. Moreover, the current issues could serve as a benchmark in case Slovakia issues yen-denominated bonds again in the future.
