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Ministry: Bond Issue Confirms Credibility of Govt's Reform Agenda

Ljubljana, 03 May (STA) - The success of Thursday's Slovenian US$3.5bn dual-tranche bond issue confirms the credibility of the government's reform agenda with investors, and the country's access to international capital markets, the Finance Ministry wrote on Friday.

The final book of over US$16bn across both tranches is one of the largest order books for dollar-denominated sovereign bonds in the EU this year, the ministry stressed.

A total of 234 investors listed as much as US$3.9bn for the US$1bn 5-year bond, while 342 investors offered US$12.4bn for the US$2.5bn 10-year bond.

Most investors were asset and wealth managers, with 56% of those interested in the 5-year bond coming from the UK and 28% from the US, while 67% of those who listed orders for the 10-year bond coming from the US and 21% from the UK, the ministry revealed.

Following a surprise two-notch sovereign rating downgrade of Slovenia by Moody's just before the order book was closed, which forced the ministry to suspend the issue for two days, the book was reopened with a +12.5 basis point correction of the yield guidance to 5.125% area for the 5-year bond and 6.25% area for the 10-year bond.

However, the ministry stressed that the final pricing was "well inside of the initial guidance" with a yield of 4.95% for the 5-year coupon and 6% for the 10-year coupon.

When swapped back to euros, Slovenia achieved a 4.59% yield on the 5-year tranche and 5.45% on the 10-year bond, which the Finance Ministry points out is lower than the cost of borrowing the country would get for a comparable transaction in euros.

The dollar bond issue was preceded by a series of roadshows in US financial centres and London.

While Moody's downgraded Slovenia's rating to junk level of Ba1 and maintained a negative outlook on Tuesday, rival rating firms Fitch and Standard & Poor's kept the sovereign rating at a four-notch higher investment grade A-.

Moreover, S & P reaffirmed on Wednesday its A- long-term foreign currency rating for the country.

Following a 24h period to allow the market to digest the downgrade by Moody's, Slovenia seized the significant market momentum and reopened the issue on Thursday.

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