MNI INTERVIEW2: Slovakia Looking At New 12Y For October -DMO

Slovakia plans to raise up to EUR2 billion with a new 12-year or perhaps longer-maturity bond syndication this October, the head of the Slovak Debt Management Agency told MNI.

There is a possibility the bond could be for 20 years, but the highest probability is for 12 years, ARDAL director Daniel Bytcanek said in an interview, noting that this would be closer to a 10-year maturity and that there is no significant redemption in the 12-year horizon.

“Probably in the second half of October, we will be in the market with new benchmark in size up to 2 billion, because we have currently in our pockets 8.6 billion from the 12. So, that's a space for 3.5 billion new debt,” he said. (See MNI INTERVIEW: Little Appetite For EU Defence Bonds-Slovak DMO)

Slovakia is also planning three auctions in the September-to-November period of EUR500 million each, Bytcanek said.

AUCTIONS DOMINANT

While the country’s issuance is usually split in equal parts between auctions and syndication, the syndication portion will possibly be lower this year, at around EUR5 billion, compared to an amount raised from auctions closer to EUR7 billion, Bytcanek said.

“Probably the final size for the syndication will be only five, not six, because of our global room or global space of issuance,” he said, noting that for the first time the country issued two retail bonds, for a total of EUR500 billion with strong demand.

Slovakia does not want to make total issuance of more than EUR12 billion this year, so will adjust its auctions according to the gap left by syndication, including special auctions such as the one seen in June. The special auctions are unlikely to be beyond the four-year maturity as the country prefers to syndicate longer issuance, Bytcanek said.

Special auctions come in response to strong demand for short-term paper in the region, and as Slovakia fills gaps in its redemption profile and supports primary dealers, with many international primary dealers having left the market in Europe.

FOREIGN CURRENCIES

European Central Bank quantitative tightening is also forcing Slovakia to diversify into other markets, as the ECB holds EUR23 billion of the country’s total EUR80 billion debt.

“We need 6 billion for standard maturing debt, 6 billion for the new deficit. It's together 12.  But for this maturing debt, we have to be careful,” Bytcanek said. “Because from this 6 billion, 2 billion is maturing in the central bank. And we have to find a brand new investor outside of the central bank. So, that's the reason for diversification or main reason.”

Slovakia issued in Swiss francs last year and this year and plans to do so again in spring 2026, Bytcanek said, adding that if market conditions permit it also plans to return to the dollar market next year.

“Now the dollar is weak compared to euro, but definitely we have to swap it back to euro,” he said.

Slovakia is also looking to issue in sterling and Czech korunas, as part of at least EUR1 billion minimum in foreign currency issuance per year.