Latvia going to euromarkets

Latvia is poised to take advantage of the low interest rate environment and issue 10-year eurobonds worth 300 million - 400 million euros later this year, of which part of the proceeds will be used to redeem the first eurobond emission and part to cover budget expenditures.

The Finance Ministry reported on May 12 that it has sent a letter to a number of international underwriters-banks proposing participating in the eurobond offering and setting conditions.

Proposals from potential banks will be accepted through May 23.

The Finance Ministry hopes this year's eurobond offer will allow it to both take advantage of extremely low interest rates and cut debt-serving costs.

In May 2004 Latvia will have to redeem its first eurobond emission worth 150 millions euros, issued in May 1999.

In September 1999 an additional emission of eurobonds worth 75 million euros was issued, and in 2001 the country issued seven-year eurobonds worth 200 million euros.

Considering that there will not be sufficient funds in the national budget for redemption and that borrowing such large amounts on the domestic market is not possible, the only realistic source to raise funds from is a new eurobond emission.

Latvia's eurobonds have been in good demand around the world, according to the government.

This year the country's national debt could draw close to 20 percent of GDP - instead of the previous 15 percent - amid expanding borrowing plans. However, once the 2004 bonds are redeemed, the size of the debt is expected to decrease again, according to the Finance Ministry.