24th April 2018, Skopje – Today, government bond with 30-year maturity deadline has been for the first time issued on the Macedonian capital market.
The longer the maturity, i.e. the period to repay the funds, the greater the investor’s confidence in the Macedonian economy. Boosted confidence is also evident from the demand of investors for the 30-year bond being higher by twice than the amount offered by the Ministry of Finance.
Macedonia, in addition to Slovenia, is the only country in the region having issued 30-year bond. EU Member States in the region, which reached a maturity closest to this one, are Bulgaria issuing 20-year bond and Croatia, issuing government bond with 13-year maturity deadline.
Germany and the USA issued bonds with 30-year maturity deadline. Austria issued a bond with the longest maturity, i.e. 100-year bond.
-Macedonia economy is again on the right track. Boosted economy is evident from the economic indicators. The European Commission’s recommendation for starting the European Union entry talks, the solid fiscal policy and the upgraded outlook by the Fitch Credit Rating Agency for Macedonia are a proof enough that the economy is on the right track. Thus, we may promote an instrument such as the 30-year government bond on the market, indicating boosted confidence of the investors therein. It also speaks of higher aspirations of our country – Minister of Finance Dragan Tevdovski said.
Private pension funds and insurance companies are the investors in the 30-year bond.
-Taking into account the goals of the investment strategy and the age of the members of the Pension Funds, investing in 30-year bond is of the best interest for our members and the achievement of their long-term objectives. Macroeconomic stability and positive expectations for long-term growth additionally underpin the decision to invest in this instrument – KB First Pension Company said.
– We welcome the issue of the 30-year government bond. When exchanging ideas with the Ministry of Finance, we, as a pension fund management company, have previously emphasized the idea for issuing bonds with longer maturity, matching the maturity of the pension -related liabilities for the members of the pension funds we manage. By investing part of the funds in this instrument, stable long-term yield is generated for the members, adding to the quality of the pension funds portfolio. When managing the funds of our members, we always consider the principle for greatest reliability and quality within the legal possibilities and the potential investment instruments – NLB New Pension Fund representatives stated.
New 30-year bonds is sold in the amount of one billion and 200 hundred million denars (EUR 19.5 million), being half of the demand by the investors. The interest rate amounts to 4.85%.
In addition to the confidence, the issue of long-term securities reduces the public debt re-financing risk. Thus, in March 2012, 92% of the issued government securities were short-term, while 8% of the government securities were with longer maturity, in March 2018 this ratio is 40% of short-term securities compared to 60% long-term securities.