Andorra Closes €500M Sustainable Debt at 3.875% Amid 2.58x Oversubscription

Andorra has successfully closed a €500 million sustainable public debt issuance at a 3.87% coupon, attracting €1.292 billion in demand—2.58 times the amount offered—from 57 investors across 16 countries.

The three-year bond refinances a €500 million issuance from 2022, due to mature in February 2027. Finance Minister Ramon Lladós shared the outcome after Wednesday's Council of Ministers meeting, emphasizing the tight 32 basis point risk premium over benchmarks. This marks a decline from 115 basis points in 2021 and 71 in 2022.

Investors included Andorran banks, European institutions, insurers, pension funds, and participants from the US, UK, and Middle East. Notable buyers were the European Commission and European Investment Bank, which Lladós described as an extraordinary endorsement given the Commission's usual focus on EU member states.

The government pointed to improved financing conditions relative to neighbours: Andorra's spread over Spanish debt fell to 44 basis points from 82.6 in 2021 and 66.9 in 2022, while the gap with French debt narrowed to 14 basis points from 105.5 last year. Officials linked the strong reception to Andorra's enhanced international standing, reflected in public debt projected to drop to around 28% of GDP by year-end, down from 46.3% in 2021.

Lladós framed the result as a clear sign of market trust, despite global rates lifting the coupon above prior levels. On 23 September, the government published its new international issuance framework, covering green, social, and sustainable bonds.