Lithuania Has Redeemed Bonds – State Debt Decreased by 2.9% of GDP


2016 02 10


Vilnius, February 10. The State debt decreased by EUR 1.1 billion or 2.9% of gross domestic product (GDP) projected for 2016  – today the Ministry of Finance has redeemed two issues of Government Securities (GS) circulated in foreign and domestic markets 11 years ago.

“For the second year in a row we refinance the previous Eurobond issues by 2-3 times cheaper borrowed funds. This allows budget savings for interest payments and their allocation to our public needs”, Minister of Finance Rimantas Šadžius said.

Lithuania has redeemed the EUR 1 billion Eurobond issue placed in the foreign market in February 2005 and reopened in February 2006 with 3.75% annual interest paid on it.

The issue was redeemed by using savings accumulated in the State Treasury gained from Lithuania’s borrowing of EUR 1.5 billion in international capital markets in October 2015. It was the largest amount borrowed through the single placement – two (10-year and 20-year maturity) Eurobond issues by EUR 750 million each were circulated at once. 1.25% annual interest will be paid on the 10-year maturity Eurobond issue, and it is the lowest borrowing cost in our country’s history. Lithuania will pay 2.125% annual interest on the 20-year maturity (the first of such maturity) Eurobond issue.

The Ministry of Finance has also redeemed the GS issue of almost EUR 108 million placed in the domestic market in February 2005 with 3.75% annual interest also paid. At present the Government borrows at around 1.4% annual interest for the same period in the domestic market.

In 2016 the Government plans to borrow around EUR 1.7 billion, the major share of funds will be allocated to repayment of former debt. It is projected that at the end of 2016 the State debt will make up around EUR 15.9 billion or 40.9% of GDP.

The next Eurobond issue (750 million-US dollar issue with 5.125% annual interest circulated in 2010) in the nearest future Lithuania will redeem in September 2017.

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