Slovakia plans $250 million follow-up Eurobond

Less than two months after the premiere $750 million Slovak Eurobond hit international markets, Slovakia plans to issue a complementary tranche of mark-denominated Eurobonds equalling $250 million, Finance Ministry officials announced on June 15.
"The government had mandated us to issue up to $1 billion worth of international bonds...at present we are preparing another issue to complete the volume we have the mandate for," Finance Minister Miroslav Maxon told a news conference, adding that the issue should be ready to roadshow within the next several weeks.
"We consider the launched issue successful and we expect that the new issue will also be successfully launched at a correct price," Maxon said, while declining to elaborate on the price expected by the ministry.

Less than two months after the premiere $750 million Slovak Eurobond hit international markets, Slovakia plans to issue a complementary tranche of mark-denominated Eurobonds equalling $250 million, Finance Ministry officials announced on June 15.

"The government had mandated us to issue up to $1 billion worth of international bonds...at present we are preparing another issue to complete the volume we have the mandate for," Finance Minister Miroslav Maxon told a news conference, adding that the issue should be ready to roadshow within the next several weeks.

"We consider the launched issue successful and we expect that the new issue will also be successfully launched at a correct price," Maxon said, while declining to elaborate on the price expected by the ministry.

Hoping to restructure state debt and gain breathing space in a fierce fight for funds against domestic banks, the Slovak government issued its debut international bonds on May 14 with a value of $750 million. The issue was split into three tranches - a 600 million Deutsche mark five-year bond yielding 350 basis point over Bunds; a five-year $300 million tranche at 370 basis points over U.S. Treasuries; and a pre-placed 15 billion yen three-year bond.

According to syndicate executives, the mark tranche was much easier to sell than the dollar issue. While European retail investors and intermediaries hunted for high yields, buying the mark-denominated bonds, American institutions were hesitant when laying their hands on dollar-denominated papers. Hence the mark issue repeat.

"There is further room on the mark market, mainly for small investors, to increase the issue to the originally planned volume," Juraj Sipko, head of the ministry's foreign relations department, said at the same news conference.

Maxon said that the issue should be split into two unspecified tranches. But Sipko said it was too early to elaborate on the bond's maturity and on the launch timetable, saying the exact issue date would depend on the market situation in southeast Asia and in Russia. "Development in southeast Asia and on the Russian market have raised a lot of questions about the timing of the new issue," he said. "We expect it to be launched within a few weeks providing that market conditions return to where they were when we were preparing the first issue."

Ministry officials declined to name the arranger of the mark issue, but Sipko said that German Commerzbank had "a strong position on the Euromark market."

Commerzbank acted as joint lead manager with Nomura on the mark tranche of the first Slovak Eurobond.

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