Successful Auction: Eurobond Re-opened in the Domestic Market for the First Time


2021 09 13


On Monday for the first time Lithuanian investors were offered to tap in an auction a Eurobond that was previously issued in the international markets. The auction was the first step in ensuring the investors have an option to buy more liquid Government securities, whereas Lithuania borrowed at better terms.

In the Monday auction the initial EUR 750 million amount of the Eurobond was increased by EUR 75 million. This auction had an impressive demand from investors, the total order amount was EUR 167 million. Average weighted yield set at the auction (-0,381%) was lower than bid yield of this issue in the secondary market and lower than bid yield of the Government bonds of similar maturity registered in Lithuania.

‘It has been seven years since Lithuania joined the euro zone but we still do not fully utilise the potential provided by the Eurosystem. Tapping the Eurobonds in the domestic market is just the first step in reducing the borrowing costs and increasing the effectiveness of the capital market,’ Mr Gediminas Norkūnas, Vice-Minister of Finance, said.

Up until now only Government securities registered in Nasdaq CSD SE Lithuanian branch were issued in domestic auctions. The Eurobond that was tapped today is listed on the Luxembourg stock exchange. It was issued on 6 May 2020, annual coupon – 0.25%, issue yield – 0.345%, the bond is due on 6 May 2025.

‘we are happy that the technical capabilities of the stock exchange contribute to the issuance of the Government securities and at the same time we enable the domestic investors to participate in such auctions in Lithuania,’ Mr Saulius Malinauskas, the president of the Nasdaq Vilnius stock exchange, said.
Nasdaq CSD Lithuanian branch had an important role in creating the settlement infrastructure. The Ministry of Finance will settle the Eurobonds via the Nasdaq CSD link with Clearstream Luxembourg.

Government securities in the domestic market are being issued on Monday auctions that are organised by Nasdaq Vilnius. Recently 5 different tenors (3-, 4-, 5-, 6- and 8-year residual maturity) were offered to the investors. The Ministry of Finance plans to tap Eurobonds of up to 15 years, taking into account the size of the bond, coupon and potential demand.

Historically the domestic market had higher demand for short and medium (up to years) terms Government securities. The international markets provide long term (from 10- to 30-year) maturities and this way a balance between borrowing costs and refinancing risk is ensured.

Additional information:
By the first day of every month the Ministry of Finance publishes on its website a three-month auction calendar that can be found here.