Bosnia region sells 6-month T-bills at stable low yield

SARAJEVO, April 15 Tue Apr 15, 2014 9:14am EDT

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SARAJEVO, April 15 (Reuters) - Bosnia's cash-strapped autonomous Bosniak-Croat Federation raised 15 million Bosnian marka ($10.6 million) in a six-month treasury bill auction on Tuesday to pay maturing debt, the region's finance minister said.

"The auction proceeded in a satisfactory manner," Ante Krajina told a news conference. He said the average yield remained stable from the last auction on April 1 at 0.81 percent.

Investors placed bids for 49.3 million marka worth of treasury bills against 15 million marka on offer, and Krajina said that his ministry planned to organise regular bi-monthly T-bill auctions to secure budget liquidity.

The Federation plans to issue 260 million marka worth of T-bills and 50 million marka worth of bonds this year to fill the budget deficit planned at 661 million marka, created due to loans for infrastructure projects by public companies, Krajina said.

The Federation had planned to plug the remaining budget gap of 350 million marka with funds from the International Monetary Fund and the World Bank but the IMF in February froze the disbursement of funds under its 385 million euro ($531.90 million) standby loan.

The funds have been halted over the failure of Bosnia's two regions, the Federation and the Serb Republic, to implement economic measures agreed under the loan deal.

The Serb Republic says the IMF terms are too strict and that it has secured an alternative Russian commercial loan, the terms of which have not been disclosed.

Krajina said the Federation was still counting on IMF cash but was also pondering a "Plan B", without elaborating.

The Federation will issue 20 million marka worth of six-month T-bills on May 6.

($1= 1.414 Bosnian marka)

($1 = 0.7238 Euros) (Reporting by Daria Sito-Sucic; Editing by Matt Robinson)

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