23.10.2012

At the auction held on 22 October 2012 for reopening a GS issue of 2008 the yield achieved was 2.02%. This is the lowest indicator achieved so far in the 5-year segment. The approved amount is BGN 45 million and the residual maturity - 5 years and 2 months. The yield of the first reopening for the 2012 issue year in April was 4.12%, while at the July auction the weighted annual yield was 3.49%. For comparison, the yield of the Bulgarian issue is considerably lower than the current yield on other countries' bonds, whose maturity is shorter (2017) - Hungary (6.11%), Portugal (5.12%), Spain (4.13%), Poland (3.99%), Italy (3.58%) and Ireland (3.24%). The trend for narrowing the spreads on all segments of the Bulgarian sovereign curve to the benchmark Bunds is strengthening. The spread to the Bunds maturing in 2017 has narrowed to the record for the medium term maturity 1.34 p.p.

Investor demand exceeded about three times the amount offered for sale. The offer being for BGN 45 million, the orders of the participants were for BGN 124.95 million. The analysis of investors shows that in addition to banks that acquired around 53% of the overall approved nominal amount, stronger interest is observed by trust and guarantee funds and investment intermediaries - around 38%, and pension funds - around 9%. After the auction the total amount of the issue is BGN 290.7 million.

The auction held confirms the downward yield trend along the whole spectrum of the debt curve. In line with the auction results are the published on 12 October 2012 ECB data on the long term interest rate to assess convergence level of all EU Member States. According to that data the indicator for Bulgaria in September is 3.80% and is lower than that of nine euro zone Member States and of five non-euro zone countries. The current yield on the reference 10.5-year GS issue used to determine the long term interest rate is 3.49%.