Slovenia’s dollar-denominated benchmark bonds declined, pushing yields to the highest level this year as bailout risks increase.
The yield on the notes maturing in 2022 advanced 13 basis points to 5.556 percent at 11:43 a.m. in the capital Ljubljana, the highest since Nov. 29, according to data compiled by Bloomberg.
The two-day-old government of Prime Minister Alenka Bratusek may be forced to ask for international aid to prop up the banking system because of increased political risk, economists at Nomura International Plc said in a report yesterday. The Cabinet has signaled it prefers pro-growth policies over austerity, which is set to slow fiscal consolidation, boost debt and possibly prompt a credit-rating cut, economists Peter Attard Montalto and James Burton in London wrote in a note to clients yesterday.
“The bond-yield increase reflects the nation’s need to sell bonds by June to finance the budget and repay maturing debt and the market seems to have priced this in,” Andraz Grahek, the director of Capital Genetics in Ljubljana, said by phone. “With all the jitters around Cyprus, investors seems to be asking themselves, which country is the next in line.”
The former Yugoslav nation needs about 3 billion euros ($3.8 billion) of funding this year with financing requirements due in June, the International Monetary Fund said in a March 20 report. Banks in Slovenia would also need 1 billion euros of fresh capital, the IMF said.
Slovenia, rated A- at Standard & Poor’s, last tapped the U.S. debt market in October with a $2.25 billion bond sale. The Adriatic nation considered selling more dollar-denominated debt in January, according to former Deputy Finance Minister Dejan Krusec. The plan was scrapped after a political crisis erupted with corruption allegations against then-Prime Minister Janez Jansa, whose government was ousted on Feb. 27.
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