VILNIUS - International investors snapped up 600 million euros' worth of Lithuanian Eurobonds on Feb. 3 with unprecedented demand, allowing the government to borrow at 3.75 percent, considerably down from last year's 4.5 percent interest rate and the lowest ever for a major bond issue.
The Finance Ministry said the 11-year bond had an annual coupon of 3.75 percent, the lowest rate the country has ever paid. What's more, it had the lowest spread 's eight basis points over EURIBOR 's among similar issues by new EU states.
"This is a clear signal that Lithuania has earned international recognition as a very reliable and solid partner, whose securities have attracted investment even from central banks of European countries," Finance Minister Algirdas Butkevicius said in a statement.
Applications for the new Eurobond amounted to over 4 billion euros. Some 32 percent of the new issue was placed with German investors, 13 percent with Dutch, 11 percent with Finnish, 10 percent with British and Irish and 8 percent with French. Proceeds will be used to refinance outstanding debt and finance the budget deficit.
But the staggering success of the offering means that Lithuania is likely to return to the international bond market by the end of this year and increase the size of last week's offer to 1 billion euros, officials said.
"We are planning to raise the size of this issue to a billion euros within the next 12 months. This is likely to happen late this year or early next year," Lukas Tursa, director of the state treasury department at the Finance Ministry, told the Baltic News Service.
Tursa said an increase in the bond size to a billion euros would make it eligible for trading on the NewEuroMTS electronic trading platform, which offers greater liquidity and boosts investors' confidence.
