Slovenia has launched its first-ever 10-year sustainability-linked bond, raising €1 billion and earning an ‘A’ rating from Fitch Ratings. The issuance, which matures in July 2035, is the country’s inaugural bond under its Sovereign Sustainability-Linked Bond Framework introduced in March 2025. Fitch’s rating aligns with Slovenia’s Long-Term Foreign Currency Issuer Default Rating (IDR), which remains at ‘A’ with a Positive Outlook.
The bond underscores Slovenia’s growing role in the sustainable finance space. It diversifies the country’s debt structure, widens its investor base, and reaffirms its commitment to climate goals and ESG-aligned instruments. The proceeds will be allocated for general budgetary purposes.
The bond carries a fixed coupon of 3.125% and features a dual-step coupon adjustment mechanism based on Slovenia’s success in reducing greenhouse gas emissions. If, by July 2034, Slovenia achieves a 45% reduction in total greenhouse gas emissions by 2030 relative to 2005 levels—exceeding its upper sustainability target—the coupon will step down by 50 basis points. However, if the country fails to meet its minimum 35% reduction target, the coupon will increase by 50 basis points.
The issuance is viewed as a key development in Central Europe’s evolving ESG landscape. Slovenia is now among a small group of sovereigns tying debt costs to environmental performance. The structure of the bond incentivizes adherence to climate pledges and makes sustainability a measurable component of fiscal policy.
Fitch’s rating reflects Slovenia’s strong institutional framework and high governance standards. The country holds a top-tier ESG Relevance Score of ‘5[+]’ in areas such as Political Stability and Rights, Rule of Law, Institutional and Regulatory Quality, and Control of Corruption—all based on the World Bank Governance Indicators (WBGI). Slovenia ranks in the 79th percentile globally, highlighting its strong democratic institutions and low corruption levels.
The bond’s rating remains closely tied to Slovenia’s sovereign credit rating. Any upgrade or downgrade of the country’s Long-Term Foreign Currency IDR will directly impact the bond rating. Fitch last affirmed Slovenia’s IDR at ‘A’ and revised the outlook to Positive on April 4, 2025.
This move positions Slovenia as a forward-looking sovereign issuer in Europe’s green bond market and reinforces the trend toward linking financial instruments to environmental performance.
