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Debt Management

Securities in domestic capital markets

Created : 03.08.2017. Updated: 20.05.2021.

The Republic of Latvia organizes borrowing mainly using instruments such as government securities. In domestic markets it is largely T-bonds and T-bills.

The first issue of the government debt securities took place at the end of 1993. In the following years, as government financing requirements grew and the domestic securities market developed, longer-term securities were offered to investors in domestic market. Currently, taking into account regular T-bond auctions, there are T-bonds with the orinal term-to-maturity of 2, 5, 7 and 10 years.

On October 14, 2020, the Republic of Latvia offered GMTN Notes in domestic market for the first time.

Issuer

Domestic securities
Domestic GMTN Notes
The issuer is the Republic of Latvia, acting through the Treasury.
According to “Regulations on Issuing Government Securities” approved by the Cabinet of Ministers on 6th of May 2014, the Treasury of the Republic of Latvia performs all transactions with government securities. Domestic GMTN Notes are issued based on Global Medium Term Note programme of the Republic of Latvia, acting through the Treasury, and authorisation provided in the Law on Budget and Financial Management, respective authorisation of the Minister of Finance to the Treasury and other documents.

 

Classification of Securities

Domestic securities
Domestic GMTN Notes

The government securities fall into three groups according to their original term-to-maturity:

T-bills - securities with original term-to-maturity one year or less;

Medium-term T-bonds - securities with initial repayment term over one year but not exceeding five years;

Long-term T-bonds - securities with initial repayment term longer than five years.

The government short-term T-bills are sold at a discount and their nominal value is repaid on the maturity date. The government medium-term and long-term T-bonds are sold with semi-annual or annual coupon payments and their nominal value is repaid on the maturity date.

See Offering Circular (GMTN programme of the Republic of Latvia, acting through the Treasury).

 

Auctions

Domestic securities
Domestic GMTN Notes

Primary placement of government securities is organised via auctions or/and direct sells. Public offering is made by the Treasury in the form of Order. Primary dealers take part in auctions, unless otherwise stated or indicated by the Treasury.  Announcements on upcoming auctions and tender results are published on the Treasury homepage here.

At present, there are two types of auctions:

Competitive multi-price auctions organised by the Treasury at NASDAQ Riga (i.e. Exchange) electronic trading system Genium INET. The auctions are usually held on Wednesdays (except for 21 day T-bills) and the bids are accepted from 10:00 to 12:00. When bidding the participants indicate the amount and yield rate of securities.

Non-competitive fixed rate amount auctions organised by the Treasury at NASDAQ Riga electronic trading system Genium INET. The auctions are usually organised on Wednesdays (except for 21-day T-bills) after the competitive auctions and the bids are accepted till 3pm. Participants in their bids indicate the amounts of securities to be purchased at the weighted average yield rate set in the previous competitive multi-price auction.

Auction take place in accordance the applicable rules and procedures of Nasdaq Riga for the initial placement of Latvia government securities and GMTN Notes.

 

Direct sales

Domestic securities
Domestic GMTN Notes
Primary placement of government securities may be sold via direct sales by deals at Nasdaq Riga electronic trading system Genium INET. Direct Sales take place in accordance the applicable rules and procedures of Nasdaq Riga for the initial placement of Latvia government securities and domestic GMTN Notes.

 

Registration

Domestic securities
Domestic GMTN Notes
All government domestic securities are registered at the Central Securities Depository - Nasdaq CSD SE. Since 10th August 1999, Latvian government securities, which are sold at the initial placement via auctions are registered and included in the official list of NASDAQ Riga. See Offering Circular (GMTN programme of the Republic of Latvia, acting through the Treasury).

 

Distribution of securities

Domestic securities
Domestic GMTN Notes

Primary placement of the government securities in domestic market shall take place in cooperation with Primary dealers.

Private and legal persons may purchase government securities in the primary placement using services of Primary dealers, as well as on regulated market Nasdaq Riga, or in the OTC market via direct transactions.

The domestic GMTN Notes may be offered and sold by the Republic of Latvia, acting through the Treasury, to Primary dealers and other Nasdaq Riga members in Latvia only and will not be offered or sold by or on behalf of the Issuer in any other jurisdiction.

See more Offering Circular (GMTN programme of the Republic of Latvia, acting through the Treasury)

 

Transaction Fees

Domestic securities
Domestic GMTN Notes
The fees for transaction in Nasdaq Riga with Latvian government securities are diclosed in Nasdaq Baltic Member Price List.

 

Settlement system

Domestic securities
Domestic GMTN Notes
Transactions with the government securities are made in compliance with principle of Delivery Versus Payment.
The settlement for the government securities in the primary placement in organised by the Central Securities Depository - Nasdaq CSD SE. See more in Offering Circular (GMTN programme of the Republic of Latvia,, acting through the Treasury) and Primary dealers agreement.