Kamenicky: Rating Downgrade Changed Nothing, Slovakia Borrowing as Before

Bratislava, 27 April (TASR) - Financial markets generally anticipate the moves of rating agencies, and so Standard & Poor's expected downgrade of Slovakia's rating on Friday (24 April) came as no surprise; nothing fundamental has changed, and Slovak government bonds are trading on the markets under similar conditions as before, Finance Minister Ladislav Kamenicky (Smer-SD) emphasised at a press conference on Monday, once again rejecting the opposition's claim that the current government is pursuing poor fiscal policy. The finance minister noted that S&P had for a long time rated Slovakia two notches higher than other major rating agencies. Therefore, it was expected that its rating would gradually converge with those of the others. According to Kamenicky, in the current negative international economic situation it's unrealistic to expect rating upgrades, and several other European countries have recently seen their ratings downgraded. He noted that financial markets have assessed the situation in a similar manner. "If you look, for example, at the secondary market and how our interest rates - the rates at which we borrow on international markets - are developing, nothing significant has happened; nothing significant has changed. We're proceeding as we have been so far," stressed the minister, pointing out that Slovakia is entering the global bond index for the very first time, which should lead to higher demand for Slovak bonds in the future. Debt and Liquidity Management Agency (ARDAL) director Peter Soltys emphasised that the agency doesn't expect any change in yields or risk premiums on Slovak bonds following the rating change, and current trading has confirmed this. Ten-year bonds traded in the range of 3.65-3.74 percent on Monday, and yields fell slightly during the day, he noted. "So, levels similar to last week, with almost no movement compared to last week's auction or Friday," assessed Soltys. The risk premium on Slovak bonds relative to German bonds is developing in a similar way, hovering around 60 basis points on Monday. The ARDAL head noted that Slovakia has already borrowed €5 billion this year, which is roughly half of the total planned volume of €10-11 billion. "The average interest rate is 3.67 percent, which is roughly on a par with 10-year bonds, with the average maturity of the newly issued bonds being 12.77 years," he stated. am/df