Estonia’s government bonds reach maturity in September

Estonia’s two-year government bonds will mature on September 16, returning their face value to investors along with the final interest payment.

The bonds were sold to retail investors in 2024, when more than 7,000 people showed interest and the issue was oversubscribed four times. The government raised 200 million euros through the offering. The final payment includes fixed interest of 3.3% for the last year.

Investors may choose to put the proceeds into Estonia’s 10-year government bonds issued in May this year. Those bonds mature in 2036 and pay fixed annual interest of 3.5%. Because global interest rates have risen, they currently trade at a discount on the secondary market, with a yield to maturity of around 4%, according to Janno Luurmees, head of the Treasury Department at the Ministry of Finance.

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More than 7,000 retail investors were interested in them in 2024, and the issue was oversubscribed four times. This shows trust in the Estonian state.

Luurmees said the government bond had filled an important gap by offering savers and first-time investors an attractive, low-risk investment option. The 2036 bonds are available to retail investors through the Tallinn Stock Exchange.

Tax arrangements require action from some investors. Individuals who bought the maturing bonds through an investment account and have not previously notified LHV must submit an application by September 14. Investors with multiple investment accounts must file a separate application for each one. If they do not, the state will withhold income tax from the interest. The ministry said deferral allows the full interest payment to remain in the investment account and be reinvested if desired.

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The two-year bonds are now reaching maturity.