Republic Raised Hundreds of Millions with Federal Bonds
The Austrian Federal Financing Agency (OeBFA) issued federal bonds worth 1.5 billion euros on Tuesday. The demand was high, and the conditions were good, said OeBFA head Markus Stix to APA. With this, Austria has already covered 60 percent of the currently foreseeable financing needs for this year. An adjustment after the budget speech of the new federal government and the budget resolution in the National Council is still pending, but Stix does not expect "significant changes."
"Capital market very keen to buy Austrian federal bonds"
Specifically, a 10-year bond was increased by 900 million euros and a bond maturing in 2044 by 600 million euros. For ten years, there was a yield of 2.943 percent, and for the bond with 19 years remaining, there was 3.402 percent. The interest rate spread to Germany is at 40 basis points, not yet at the long-term average of 30 basis points, but significantly better than the interim 70 basis points. "The capital market is very keen to buy Austrian federal bonds," said Stix.
There is now a "normal structure" in interest rates, meaning more interest for longer-term bonds. This is "more pleasant" for the OeBFA as well as for the bond buyers. The demand was significantly higher than in April, which was also due to the relatively stable interest rate situation in recent days.
The interest rates already factor in a reduction of the ECB's rates by 25 basis points (0.25 percent) at the beginning of June, as well as a "reduction towards up to 1.5 percent" by the end of the year, said Stix. In the USA, the market is pricing in an interest rate cut of 80 basis points "by the end of the year." However, the first step is expected no earlier than July.
Stix satisfied with the development of the "Bundesschatz.at" offer
Stix is also satisfied with the development of the "Bundesschatz.at" offer. Private investors can achieve the same conditions as for federal bonds there - after taking fees into account. "We do not earn anything with the instrument," but it is also not subsidized, assured Stix. 4 billion euros have been accumulated in 110,000 accounts. Among other things, the offer is highly appreciated by guardians, as it is straightforward and safe for minors. New are also trust accounts for insolvency administrators and notaries.
(APA/Red)
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