By Marja Novak
LJUBLJANA (Reuters) - Slovenia, which is struggling to avoid an international bailout, has mandated three foreign banks to explore funding opportunities, the euro zone member's finance ministry said on Thursday.
Analysts said the ministry would have been encouraged to explore possible fund-raising after seeing strong demand at a treasury bill sale on Wednesday.
The ministry said the banks - BNP Paribas, Deutsche Bank and JP Morgan - would arrange a series of investor meetings in several financial centers from April 22.
"This is not a mandate for a bond issue but for a non-deal related roadshow which will test the possibilities for Slovenia's financing on international capital markets in 2013," Irena Ferkulj, a ministry spokeswoman, told Reuters.
The news came a day after Slovenia issued 1.1 billion euros of 18-month treasury bills, more than double the target, and then repurchased 511 million euros of similar bills that mature in June, thus reducing the squeeze on its finances.
The successful early rollover of treasury bill debt brought down yields on Slovenia's sovereign debt, which had spiked to nearly 7 percent in the last few weeks.
The country has been under severe market pressure since Cyprus secured a bailout last month on speculation that it could be the next euro zone member to require international help due to high debts at its ailing banks.
Finance Minister Uros Cufer told Reuters last month that Slovenia would only tap international markets when they have settled following the Cyprus bailout.
But Timothy Ash of Standard Bank said Slovenia should "come to the market early to get cash in the bank while global markets are still flush with liquidity and financing is still relatively cheap".
"I think also it would be good to take advantage of any positive momentum following the T-bill auction. That said, the government will need to have some clear answers about its reform programme if it is road showing," he said.
The yield on Slovenia's 10-year benchmark bond fell to 6.79 percent on Thursday versus 6.96 percent on Wednesday and 4.77 percent on March 15, the day before the Cyprus bailout deal.
The four-week-old centre-left government of Prime Minister Alenka Bratusek has promised to start privatisation procedures later this month and by June establish a bad bank that will take over bad loans of local banks and enable their sale.
Slovenian banks, mostly state-owned, are nursing some 7 billion euros of bad loans which amounts to 20 percent of GDP.
The government also plans to reduce the public sector wage bill by about 5 percent and increase some taxes to further narrow the budget deficit, which fell to 3.7 percent of GDP in 2012 from 6.4 percent the previous year.
The country of 2 million people was badly hit by the global crisis due to its dependency on exports. It fell into a new recession in 2012 following weaker exports and a decline in domestic spending due to budget cuts.
The government needs to raise another 2 billion euros this year to cover the budget deficit and recapitalise state banks.
(Editing by Zoran Radosavljevic and Susan Fenton)
