Exclusive: Lithuanian DMO Director: Could Issue Bond Around 20-Year Tenor if Conditions Permit

3 April 2025

By Marta Vilar – MADRID (Econostream) – Lithuania is planning to deliver a bond issuance around the 20-year tenor soon if market conditions allow for it, according to Rasa Kavolytė, Director of the State Treasury Department of the Ministry of Finance of the Republic of Lithuania.

In an interview with Econostream on 1 April 2025 (transcript here), Kavolytė said that the Treasury’s plan is to ‘enter the market at least twice this year - once before the summer and again in the fourth quarter.’

There are a few options on the table, she said, including foreign currency issuance, ‘although no final decisions have been made yet.’

The Treasury was aware of the higher demand in long-term debt and was looking forward to tapping the longer part of the curve, according to Kavolytė.

‘Our current curve is not very liquid; therefore, we think that secondary levels do not necessarily reflect actual pricing levels of a potential new bond’, she added.

The 15-year bond issued in early 2025 was the Treasury’s first step in a move towards the longer part of the curve, she indicated.

‘If market conditions permit, I think we’ll be looking at issuing more – maybe a 20-year bond or so’, she said.

Asked if the Treasury expected to maintain the monthly issuance of the 1-year defence bonds, Kavolytė said that there were no plans to change this.

Coupons paid on these defence bonds, with a maximum cap at 2%, could fall below that level towards the end of 2025, she said.

‘At the moment, we have no plans to make the defence bond a market instrument or to issue a defence bond that would have the secondary market and be available there’, she said.

Regarding the €2.5 billion expected to be borrowed in domestic markets, Kavolytė said the Treasury might increase the amount issued in weekly auctions due to their ‘significant need to borrow in the international markets’.

‘However, everything will depend on market rates and auction demand’, she said.

The Lithuanian Treasury had no plans to tap the green bond market in the near future, according to Kavolytė.

Asked about the possibility of getting a rating outlook upgrade soon, she said that there was ‘potential’ for such an outcome.

‘However, given current market volatility and the unresolved situation in Ukraine—which has a direct impact on Lithuania—we don’t think an upgrade is feasible in the near future’, she said.