On Tuesday, the Estonian government announced an international bond issue with a redemption period of ten years, the money will be used by the country to cover the budget deficit and supplement the liquidity reserve.
The volume and interest rate of the bonds will be determined at the time of the issue and depends on both market interest rates and investor demand.
According to the state budget, the state's debt burden will increase to 19.8 percent of GDP next year. Government sector debt will increase by 780 million euros to 7.65 billion euros in 2023.
The last time Estonia issued 1.5 billion euros in long-term bonds in last year's referendum to cope with the corona crisis after an 18-year gap. In the past, investors' interest in Estonian bonds has been high, but the market is uncertain.
"It is in our favor that Estonia has strong budget discipline, a low level of debt, in addition to a stable and well-capitalized banking sector, which are reflected in a high credit rating. The risks are more broadly related to the security situation in Europe and the weakness common in developed countries, which is considered to be an aging society and a shrinking population," said Sven Kirsipuu, the Vice-Chancellor for Fiscal Policy of the Ministry of Finance.
The bond issue is organized by Citibank, Goldman Sachs and Societe Generale. The bonds are planned to be listed on the Dublin Stock Exchange.