MNI INTERVIEW: Estonia Could Sell Two Benchmark Bonds In 2021

Estonia could issue two benchmark-sized eurobonds next year, a senior Treasury official told MNI, one more than this year, after the country completed its 2020 long-term funding programme.

Budget preparations that will determine the size of Estonia's 2021 borrowing needs are ongoing, Marten Ross, Deputy Secretary General of Estonia's Ministry of Finance, said, however "our working assumption is that we will issue one or two benchmark-size Eurobonds.'

In 2020, Estonia conducted one Eurobond issue for EUR 1.5 billion in June, in its first ever benchmark issue, at near-zero rates, as funding deficits increased "sharply", and sold T-bills worth EUR575 million..

In an emailed response to questions, Ross said the eventual unwinding of the European Central Bank's pandemic emergency purchasing programme could have different effects on bond markets depending on economic conditions at the time. But, he said, "if sovereign borrowing requirements remain at elevated levels, a simple supply-demand analysis would imply that interest rates and credit spreads would rise.

"Clearly, so long as sovereigns run deficits there will be net bond issuance, regardless of what ECB programmes are in place."