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MNI INTERVIEW: Slovenia Sees More Longer-Dated Bond Value

Slovenia's debt agency still sees value in longer-dated bond issuance despite the pick-up in yields over recent weeks, and will continue to extend the average duration of its portfolio, Director General Marjan Divjak told MNI in an interview.

"Despite the recent acceleration in the move to higher yields the environment to issue long-term debt is still constructive," Divjak said in response to written questions shortly after Slovenia issued a new 60-year euro bond. Long-term funding is the "logical choice," he added, given elevated funding needs and market demand, supported via the ECB's pandemic emergency purchase programme.

Slovenia will decide how much of its 2021 funding needs will be met by NextGenerationEU funds and the Recovery and Resilience Facility by April, Divjak said. Any further euro denominated or T-bill issuance will be determined by market conditions, with the supportive euro debt capital market environment "clearly" favouring funding in the domestic currency at present.

GREEN BOND

Interest in all euro bond tranches has been "strong" this year, with a "significant" part of Slovenia's 2021 funding needs already met, he continued, adding that "the question remains what is the level of pre-financing for 2022 to be provided." A EUR500 million green bond should be issued in 2021 or 2022, he said.

To date Slovenia has executed EUR 2.9 billion long-term financing in euro bonds, together with EUR502 million in T-bills. More long-term financing came from the remaining EUR910 of an EU SURE scheme loan drawn in February.

The average weighted time to maturity of newly-issued Slovenian debt now stands at 19.4 years following the issue earlier this year of a new 10-year bond and reopening bonds with 8-, 9- and 30-year maturities, Divjak said.

The unwinding of the ECB's pandemic emergency programme will be done in an orderly and thoughtful fashion, Divjak said, although "we should not be surprised interest rates to increase from the ultra-low levels."

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com

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