The Estonian state is set to issue more short-term government bonds at the end of this month. The issue is intended to refinance those bonds distributed last year, and will be to the same total value – €250 million.

Janno Luurmees, who heads up the Ministry of Finance treasury department, said Friday that: “At the end of March, those short-term bonds issued last year will expire.”

“This new bond issue is largely aimed at the refinancing of these same [expiring] bonds.”

“This type of short-term bond issue is a completely normal liquidity management instrument, one we generally use on an ongoing basis, to maintain the level of our liquidity reserve,” Luurmees went on.

At the same time, the results of the new issue are hard to forecast, he said.

“Interest rates have been changing a lot in recent weeks, and there has been a tendency for short-term interest rates to fall. It is very difficult to predict right now what they will be going forward,” Luurmees continued, adding that the situation was nonetheless not one which required the issuing of long-term government bonds.

In March 2022, the state issued 12-month bonds totaling a value of €250 million, and which carried an average yield of -0.225 percent.

The forthcoming bond sale will consist of six- and 12-month bonds, again to a total value of €250 million.

These will be issued on March 28, 2023.

As for any potential long-term bonds this year, such as the 10-year bonds issued last fall, much hinges on the under-discussion coalition agreement, being negotiated by Reform, Eesti 200 and the Social Democrats, and also the state budget trajectory, Luurmees said.

At the same time, the question is more how much needs to be borrowed by the state, rather than if or when, Luurmees added.

The government issued two tranches of short-term bonds, combined valued at €400 million, last spring. The bulk of these were purchased by Swedbank.