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ECONOMIC BRIEFS

Finance Ministry appoints lead managers for Eurobond

The Slovak Finance Ministry said on March 29 that it had appointed Credit Suisse First Boston and J.P. Morgan as joint lead managers for a Eurobond issue.

"The government... has decided to enter the international capital markets with a debut Euro-denominated bond offering in order to create a benchmark in this important currency sector and at the same time to cover the funding needs of the government in 1999," a statement from the ministry said.

The size and the terms of the issue will be determined according to market conditions, the statement added. Ministers have suggested that the issue would probably be of around 300 to 500 million euros at a maturity of five to seven years.

On March 26, parliament approved the 1999 budget with a deficit of 15 billion Slovak crowns, or around two percent of gross domestic product. Analysts have said that the government will need to seek ways of increasing revenues to meet that target especially after a sharp slow down in gross domestic product at the end of last year.

The money acquired through the Eurobond issue will be used to restructure the government debt, Finance Minister Brigita Schmögnerová said on March 29. "We are interested in medium-term sources. The issue terms will depend on developments on international financial markets, as well as on co-operation with managers of the issue," she said.

In 1998 the Slovak government acquired $1 billion on world financial markets. In May 1998, the London-based Nomura International plc. announced it would issue a three tranche Slovak eurobond in the volume of 600 million DEM, $300 million and 15 billion JPY on May 28. In late June, Commerzbank and Nomura announced that Slovakia had increased the issue by 200 million DEM. On July 29, the two banks announced a further 200 million DEM increase. The total issue volume for 1998 came to 1 billion DEM, 300 million USD and 15 billion JPY.

Of this amount, the Finance Ministry used $400 million (13.8 billion Slovak crowns) to cover installments on state bonds issued on foreign markets in January and April. The remaining money, almost 20 billion crowns, was used for revolving state securities which matured last year.

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