(Adds details, debt agency chief comment)
By Jason Hovet
PRAGUE, May 6 (Reuters) - Euro zone member Slovakia priced 4 billion euros ($4.3 billion)of new syndicated 5- and 12-year bonds on Wednesday as it tackles funding needs seen almost doubling this year to combat the economic fallout from the coronavirus outbreak.
The country is likely on its way to a record budget deficit in 2020, officials have said, as the pandemic has led to a virtual lockdown of the central European nation and hammered the economy, much like the rest of the world.
With budget revenue being squeezed and spending rising to help hard-hit workers and firms, the crisis has upended government plans to narrow the deficit to 0.49% of GPD this year. The central bank has estimated it could balloon to 10.3%.
Debt agency ARDAL’s Managing Director Daniel Bytcanek told Reuters funding needs this year could be up to 10 billion euros, above an original plan of 5.3 billion.
With Wednesday’s debt issue, borrowing has climbed already this year to 9.7 billion euros, via syndicated deals, domestic bond auctions and the sale of short-term Treasury bills.
Katarina Muchova, an analyst at Slovenska Sporitelna, part of Austria’s Erste Group Bank, said the latest syndicated sale would ease pressure.
“(This syndicated sale) puts the debt agency into a comfortable position, whereby a significant part of this year’s financing needs has already been covered,” she said.
The new bonds were priced at 65 basis points over mid-swaps for the 5-year tenor and 110 bps for the 12-year, both tightening from earlier guidance.
Order books soared to a combined 15 billion euros.
Slovakia, rated A2 by Moody’s agency, had issued 3.3 billion in all of 2019 but has been forced to borrow quickly amid the novel coronavirus crisis and while investors soak up fresh borrowing around central Europe.
In April, Slovakia launched its first syndicated bond of the year with the sale of 1.5 billion euros of 10.5 year paper at 100 basis points above mid-swaps. It has also sold 1.35 billion euros worth of bonds on domestic markets so far this year.
To help financing this year, government officials have said the state wanted to use up to 4 billion euros of unspent European Union funds. Slovakia could also borrow up to 2 billion euros from the European Stability Mechanism (ESM). ($1 = 0.9246 euros) (Reporting by Jason Hovet; Editing by Alison Williams and Emelia Sithole-Matarise)