05.02.2013

The Ministry of Finance registered a new historical minimum of the yield on the 10.5-year Government Securities (GS). At the auction held on 4 February 2013 for GS with maturity July 2023 the indicator reached 3.26 %. This is by 17 b.p. lower than the yield of 3.43% when the issue was launched in January this year. The spread to the perceived by investors as non-risk German Bunds shrank to 1.55 p.p. After this auction the issue totals BGN 100 million.

The amount offered at the auction was BGN 50 million, while the participants subscribed almost BGN 106 million. Banks showed the biggest interest and acquired half of the approved amount. Pension funds were also active and acquired 26.80%, and investment intermediaries and insurance companies 16.60% and 6.60% respectively.

The yield on the Bulgarian issue is considerably lower than the current yield on bonds with similar characteristics of other states: Turkey (6.76%), Portugal (6.29%), Hungary (6.25%), Romania (5.87%), Spain (5.36%), Slovenia (5.03%), Croatia (4.50%), Italy (4.40%), Ireland (4.20%) and Poland (3.90%).

The auction has confirmed the positive sustainable downward trend from the second half of 2012 for reducing yield along the whole spectrum of the debt curve. The lower risk premium required by investors is indicative of the positive perception of Bulgarian GS as an appropriate investment alternative.