Treasury has issued domestic GMTN Notes with the lowest ever yield
The auction participants showed a very good interest in Eurobond domestic offering and total demand reached 151.5 million EUR. Having high demand for domestic GNTN Notes, the competitive multi-price auction was closed with the total nominal value of 20 million EUR sold, thus bid-to-cover ratio was 7.6. The weighted average yield rate was negative -0.326% and it is the lowest ever yield in the history of Latvian government debt securities in the primary placement.
Minister of Finance J.Reirs: “This is an excellent result reaching historically lowest level of interest rate and starting a new level of Latvia’s capital market development, while providing the availability for additional instrument for the domestic investors”.
The financial instrument i.e. Notes offered in domestic market under the GMTN programme of the Republic of Latvia, which the Treasury has previously issued in the international capital market with syndication method on primary placement, will now be available in domestic market by offering securities to Primary dealers only. This will ensure domestic investors, such as pension funds, insurance companies, banks and other market participants, with a access to the tap offerings of domestic GMTN Notes and accordingly will broaden the investment spectrum that is available in primary market.
The high liquidity of Eurobonds is a contributing factor of total demand and interest of investors i.e. outstanding amount of particular 2026 Eurobonds are 1.5 billion EUR and are traded also internationally. As these Eurobond taps sold in domestic auction are fully fungible with already outstanding GMTN Notes, it will promote the secondary trading activity of this instrument in Latvia and internationally.
By introducing the availability of new instrument in auctions, it will allow the Treasury to be more flexible combining the offering in domestic market also with longer tenors of Notes which previously ensured by Eurobond issuances in international capital markets.
In general, there are expectations that such activities will increase trading in government bond market, boost interest of domestic investors and is the step in the further development of the capital market of Latvia.
Public relations specialist
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This document and the information contained herein are not an offer of securities for sale in the United States or any other jurisdiction. No action has been or will be taken by the Republic of Latvia, acting through the Treasury (the “Republic of Latvia”) in any country or jurisdiction that would, or is intended to, permit a public offering of the Notes in any country or jurisdiction where action for that purpose is required. The Republic of Latvia has not registered, and does not intend to register, any of the Notes in any country or jurisdiction and, in particular, the Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in compliance with any applicable state securities laws and may only be sold outside of the United States in reliance on Regulation S under the Securities Act and otherwise in compliance with all applicable laws and regulations in each country or jurisdiction in which any such offer, sale or delivery of the Notes is made.
The Notes are being offered and sold by the Republic of Latvia to primary dealers and other Nasdaq Riga members in the Republic of Latvia only by way of auction and/or direct sales, as applicable, and are not being offered or sold by or on behalf of the Republic of Latvia in any other jurisdiction.
The information contained in this document does not purport to be a complete description of the Notes or the offering thereof referred to herein.
Please refer to the Offering Circular dated 7 June 2013, as supplemented from time to time, prepared by the Republic of Latvia in connection with its Global Medium Term Note Programme and the applicable rules and procedures of Nasdaq Riga for the initial placement of Latvian government securities for a complete such description.