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THE MINISTRY OF FINANCE HAS LAUNCHED A NEW ISSUE OF 10.5-YEAR GS AT A RECORD LOW YIELD

24.01.2017

The Ministry of Finance has launched a new issue of 10.5-year BGN-denominated government securities (GS) maturing on 25 July 2027. GS to the amount of BGN 50 million were successfully placed at the auction held on 23 January at a weighted average yield of 1.76 per cent. The subscribed amount totalled BGN 211 million, which corresponds to a bid-to-cover ratio of 4.22. The spread to the ten-year German Bunds in this maturity segment is 134 basis points. The achieved yield and spread are record low for securities in this maturity segment.

The new issue will be a reference one in 2017 in respect of the harmonised long-term interest rate to evaluate convergence level, which is one of the Maastricht criteria.

The participants showed strong interest both in the amount offered for competition orders sale and in the portion of non-competition orders sale determined for allocation among investors. Pension and guarantee funds, which traditionally show strong interest in long-term GS, acquired the biggest amount of GS at the auction, i.e. 45.03%, followed by banks with 41.60% and general insurance and life insurance companies with 13.37%.