Banks Most Interested in Federal Bonds

Bosnian Currency (Konvertible Marks)

The latest auction of Federation of Bosnia and Herzegovina bonds held on Sept. 8, where the federal government borrowed close to BAM40m, revealed the great interest of the banking sector in the government’s securities in conditions of the pandemic. 

The auction saw as many as 33 bids for the purchase of 90,279 bonds totaling BAM90.28m. 

The offer exceeded demand more than twofold, as eight bids for 40,000 bonds were accepted, whereby 40,000 bonds worth BAM40m in nominal terms, in total, were sold, daily Nezavisne Novine reports. 

All the bonds were bought by the banking sector. Unlike Republika Srpska auctions, at which borrowing is also possible over the planned amount in the event that there are bids and that the price is acceptable to the issuer, regulations in the Federation do now allow for that possibility, and so securities are sold in the amount in which they are offered. 

The considerable interest in government bonds was also reflected in the price of the borrowing, which was extremely favorable for the issuer. The bonds, which will mature in five years’ time, were sold at the average accepted ponder price of 99.9967, i.e. at an annual interest rate of 0.8507%.