Slovenia still targets bond despite bank woes

Wed Jul 4, 2012 5:44am EDT

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LONDON, July 4 (IFR) - The Republic of Slovenia (A2/A+/A) said it still intends to tap the international bond markets this year despite nagging concerns over the health of its banks.

The confirmation follows an investor update on Tuesday to discuss government reforms and recent support for its largest bank Nova Ljubljanska Banka Group (NLB).

"We are still planning on coming to the market this year but it all depends on the circumstances," said Bostjan Plesec, director general of Slovenia's Treasury Directorate.

Slovenia pulled a planned euro-denominated issuance in April, which followed an investor roadshow arranged by BNP Paribas, HSBC, JP Morgan and Societe Generale.

At the time Fitch said Slovenia had one of the weakest banking markets in Central and Eastern Europe due to rising non-performing loans.

Slovenia has just EUR700m left to fund its budget deficit before the end of the year. Plesec said it could do this through its T-Bill programme or domestic bank borrowing but its preference would be for longer maturities available in the syndicated bond market.

EU competition regulators temporarily cleared a EUR383m capital boost for NLB on Monday and will study a revamp plan for NLB to ensure it addresses the bank's problems and does not give an unfair advantage.

Slovenian authorities plan to inject more capital into NLB to meet EU solvency requirements after Belgian shareholder KBC decided not to subscribe to a new share issue. The European Commission said the capital infusions complied with EU state aid rules. (Reporting By John Geddie; editing by Alex Chambers)

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