Lithuania sells $2 billion worth of 10-year bonds
05.02.2010, 11:30Lithuania sold $2 billion of bonds in overseas markets in its biggest sale of the securities. The bond issue was arranged by Barclays Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc, according to Bloomberg data.
“Lithuania’s debt is significantly more attractive than that of its peers,” said Lars Christensen, analyst with Danske Bank. “The levels of public debt, budget consolidation, they all look better than Greece, Portugal or Spain.”
Lithuania is borrowing to help plug a budget deficit estimated at 8.1% of gross domestic product this year after the Baltic economy slumped an annual 13% in the fourth quarter.
The government of Prime Minister Andrius Kubilius cut budget spending and increased taxes to save about 8% of GDP last year. The Cabinet plans a further fiscal consolidation of 5% of GDP in this year’s budget.
The EU last week said measures to stem the shortfall were “adequate” and gave Lithuania until 2012 to narrow the budget gap to the within 3% of gross domestic product.
Lithuania raised its forecast for the economy this year on February 1, predicting a 1.6% expansion, compared with a previous forecast of a 4.3% contraction.
The country last sold dollar bonds in October, when it raised $1.5 billion in five-year securities.
Lithuania’s new bonds are rated BBB by Fitch Ratings, the second-lowest investment grade ranking. Moody’s Investors Service rates the debt at Baa1, the third-lowest investment- grade rank.