19.06.2019

20-Year GS Issued by Auction for the First Time on the Domestic Market, Record Low Yield for 10.5-Year Ones

On 19 June 2019 the Ministry of Finance held two auctions for the sale of 10.5-year and 20-year BGN-denominated government securities (GS) maturing on 21 December 2029 and 21 June 2039.

GS totalling BGN 300.6 million, incl. BGN 200 million for 10.5-year GS and BGN 100.6 million for the 20-year GS, were offered successfully at the auctions. The average weighted yield of the auctions was 0.41% for the 10.5-year GS and 1.60% for the 20-year GS. The total subscribed amount of the securities maturing in 2029 reached BGN 472 million, which corresponds to a bid-to-cover ratio of 2.36. The subscription for the 20-year GS amounted to BGN 248 million, or a bid-to-cover ratio of 1.24.

The reported spread to the analogous German Bunds is 73 basis points for the 10.5-year GS and 151 basis points for the 20-year GS. The yield for the 10.5-year GS is a record low for this maturity segment. The new issue of 20-year GS is the most long-term issue of government bonds issued on the domestic market by auction.

Great interest from participants in the new GS issues was reported. At the 10.5-year GS auction the biggest amount of GS was acquired by banks – 43%, followed by pension and guarantee funds – 34%, and insurance companies – 23%. At the 20-year GS auction the biggest amount of GS was acquired by insurance companies – 49%, followed by pension and guarantee funds – 39%, banks – 10% and investment intermediaries – 2%.