Central government borrowing is used for funding redemptions of central government debt and possible government budget deficits. The State Treasury carries out borrowing by issuing Treasury bills, bonds and private placements via banks.
Borrowing is primarily performed in the international investment market, with both banks and investors mainly based outside Finland. Government borrowing is mainly denominated in euros. When borrowing in other currencies, the State Treasury always hedges against currency risk.
For the initial issuance of benchmark bonds, the government uses so-called syndicated bond issues. This ensures that a new loan has a broad investor base and fosters price stability in the secondary market. The stock of outstanding benchmark bonds can be increased at a later date, through State Treasury auctions.
Treasury bills provide the government with a flexible, short-term financing channel. One year is the maximum maturity period for Treasury bills. The State Treasury issues Treasury bills around the year, depending on investor demand and liquidity requirements.
