The Republic of Slovenia: JPY50.0bn inaugural dual-tranche Social Samurai bond transaction

On Thursday, 29th August 2024, the Republic of Slovenia (“Slovenia”), rated A3 (stable) by Moody’s / AA- (stable) by S&P / A (stable) by Fitch / AA- (stable) by JCR, successfully priced a total of JPY50.0bn across a 3-year and a 5-year fixed rate senior unsecured bond, marking it as the first Social Samurai Bond issued by a sovereign. With a highly successful inaugural offering, Slovenia has established a strong footprint in the Japanese market. BNP Paribas, Nomura and SMBC Nikko jointly led the offering.
Mountain Fuji and yen

During the week of 8th July, Slovenia conducted a series of 1-on-1 investor meetings in Tokyo as well as a group investor call targeting Japanese investors. After confirming positive investor appetite, Slovenia filed the Securities Registration Statement with the Kanto Local Finance Bureau on 13th August and officially announced the transaction to the public.

Following 2 days of soft-sounding starting 22nd August, the joint bookrunners conducted 3 days of official marketing from 26th August with the price guidance of TONA MS+24-26bps for the 3-year, +29-31bps for the 5-year, +39-41bps for the 7-year and +54-56bps for the 10-year, respectively. The 7-year and 10-year tranches were dropped on day 2 of official marketing.

Final pricing came in at the tight end of the price guidance for both the 3-year and 5-year tranches, driven by strong demand from both Japanese domestic and offshore accounts. The total demand exceeded JPY50bn and the issue size was set at JPY50bn: JPY45.1bn for the 3-year and JPY4.9bn for the 5-year. City banks, asset managers, lifers, regional and offshore accounts participated in the transaction.

The offering ultimately priced at 2:25 CET on 29th August with the following transaction parameters: 3-year JPY 45.1bn notes with a coupon of 0.750% / reoffer spread of TONA MS+24bps / reoffer yield of 0.750% / reoffer price of 100.000%; 5-year JPY 4.9bn notes with a coupon of 0.890% / reoffer spread of TONA MS+29bps / reoffer yield of 0.890% / reoffer price of 100.000%. For the purpose of hedging against the movement of the exchange rate of the Japanese Yen against the Euro, a currency swap was implemented in the entire value of the issue.

Slovenia’s Sustainability Bond Framework (SBF) was developed in compliance with ICMA’s three ESG Principles. Proceeds from the Social Bonds will be exclusively used to (re)finance expenditures falling within the Eligible Social Project categories. The Second Party Opinion on the SBF was provided by Morningstar Sustainalytics in January 2023 and is available on the Ministry of Finance’s website.

Institutional and geographical investor distribution:

Investor Type 3yr

  • Japan 51 %

City Banks etc. 33 %
Insurance 0 %
Asset Managment 12 %
Regional Banks 3 %
Regional Cooperatives 2 %

  • Offshore 49 %

Bank 21 %
Asset mgmt 25 %
Official institution 3 %
Public Fund 0 %

Total 100 %

Investor Type 5yr

  • Japan 35 %

City Banks etc. 0 %
Insurance 20 %
Asset Managment 2 %
Regional Banks 10 %
Regional Cooperatives 2 %

  • Offshore 65 %

Bank 0 % 
Asset mgmt 61 %
Official institution 0 %
Public Fund 4 %
Total 100 %

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