Latvia to issue more eurobonds

RIGA - A new sale of the state bonds known as eurobonds was announced by the Latvian Finance Ministry on Sept. 20.

The sale will be organized by the French bank BNP Paribas, but the amount, maturity and time of the new issue has not been specified.

This sale will be in addition to a eurobond sale expected later this year.

Latvian banking experts expressed optimism about the chances of the sale succeeding.

Arvids Sipols, head of trading at Parex Bank, acknowledged that in the wake of this month's terrorist attacks in the United States, markets had become less stable than they were in 1999, when Latvia issued its first eurobonds. But the downward global trend had been withstood very well by Eastern European securities and rates have now returned to their pre-crisis level, he said.

He acknowledged that Eastern Europe could suffer a knock-on effect of the U.S. downturn via the European Union. But over all, given the generally high level of interest in Baltic securities, Latvian eurobonds were likely to continue to sell well unless similar terrorist acts recurred, he said.

Andrejs Mezals, a senior broker at Latvijas Unibanka, was also upbeat, pointing out that eurobonds currently in circulation had appreciated in value.

Good international investment ratings and excellent macroeconomic indicators also augured well, he said.

Latvia issued 5-year eurobonds for the first time on May 14, 1999. The total amount of the issue was 150 million euros ($136.36 million) and the annual interest rate was 6.25 percent.

On Sept. 22, 1999 an additional 75 million euros, worth of eurobonds were issued with the same interest rate.

Both issues were organized by Credit Suisse First Boston and were considered highly successful.

Eurobonds are the only Latvian government securities currently traded on overseas markets. Finance Ministry officials recently said the ministry planned to increase borrowing on foreign markets because of the high cost of borrowing in Latvia.