Banks, Estonia, Financial Services

International Internet Magazine. Baltic States news & analytics Wednesday, 18.09.2019, 14:57

Estonia issues EUR 200 mln worth of treasury bills

BC, Tallinn, 11.06.2019.Print version
The Treasury of Estonia for the first time sold 200 million euros' worth of treasury bills with a negative yield at an auction on Monday, reported LETA/BNS.

A negative yield means that the buyer of treasury bills is to pay interest to the state treasury, the Ministry of Finance said.

Participators in the auction included LHV, Luminor, SEB and Swedbank. The bidder offering the most favorable interest rate for the state will win the right to buy the debt instruments.


As a result of the auction, the Treasury auctioned 100 mln euros' worth of treasury bills for six months with an average yield to maturity of -0.063% and another 100 mln euros for 12 months with an average yield of -0,19%.


The bonds are registered with the Nasdaq CSD SE Estonian Depository.


The Ministry of Finance confirmed the framework for the issuance of treasury bills for cash management purposes in April this year, which, if necessary, allows the Treasury to use bonds with a maturity of up to one year.


Compared to standby loans by banks, treasury bills provide a more affordable supplementary instrument for cash management.


The monthly cash flow of the Treasury varies by several hundreds of millions of euros -- a large number of payouts are made at the start of the month, whereas much of the income is received after major outlays have been financed. Additionally, the Treasury must guarantee liquidity in the event of exceptional occurrences.


The Treasury has previously concluded agreements on standby loans with banks, which entail a fee. With the framework for the use of short-term debt instruments, however, the state does not incur any running costs.


A short-term treasury bill framework document has been adopted in most countries of the world and serves as the main instrument for short-term cash flow management by giving access to the widest circle of investors. Also, it is possible to choose the size of the loan and the repayment deadline in accordance with need. 






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