Slovenian lawmakers are set to approve the sale of state-owned companies, including a bank Nova Kreditna Banka Maribor d.d. to restore investor confidence as the yield on its benchmark bonds neared a record high.
Lawmakers in the capital, Ljubljana, will vote on the plan to sell 15 enterprises today, parliament spokeswoman Karmen Uglesic said by phone. Along with the bank, the country wants to sell its telecommunications company, Telekom Slovenije d.d., after Slovenian banks and other investors last week agreed to sell the majority in retailer Mercator Poslovni Sistem d.d. to Croatia’s Agrokor d.d.
“The sale of indirectly state-owned Mercator gives legs to privatization moves and the Cabinet can leverage the European Commission pressure to augment efforts on bank and structural reforms,” Hrvoje Stojic, head of research at Hypo Alpe-Adria Bank in Zagreb, Croatia, said in an e-mailed reply to questions. “Elevated yields reflect rather classic market pressure ahead of milestones such as a wave of privatizations.”
Slovenia, whose economy is poised to shrink for another year before recovering in 2015, is embarking on an asset sale program and wants to fix its struggling bank industry that was at the center of investor concern the nation may need outside assistance. The government, which says it won’t need a bailout, controls about 50 percent of the whole asset base of companies incorporated in Slovenia, according to Andraz Grahek, a managing partner at Capital Genetics in Ljubljana.
The yield on the dollar-denominated notes maturing in 2022, which yesterday surged to the record high of 6.6 percent, declined 12 basis points, 0.12 percentage point, to 6.48 percent at 11:43 a.m. in Ljubljana, according to data compiled by Bloomberg.
“Unfortunately, the privatization does not do the trick in such an abysmal macroeconomic situation and therefore the budget deficit has already hit planned levels and the deterioration of the asset quality of the banks is continuing,” Grahek said in an e-mail.
Gross domestic product will shrink 2.4 percent this year and 0.2 percent in 2014, the government’s forecasting institute said yesterday, as Europe battles its own recession and the Slovenian government pushes on with its austerity drive, hurting consumption and investments.
Nova Ljubljanska Banka d.d. and other investors agreed June 14 to sell their 53 percent holding of Mercator to Agrokor for 240 million euros ($317 million). The transaction, set to be completed by year’s end, will help banks to partly restore their balances.
Slovenian lenders will on June 28 start transferring toxic loans to a bank asset management company, while the government has said it will inject 900 million euros into three top banks, NLB, Nova Kreditna and Abanka Vipa d.d.
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