25.09.2012

Record low yield of 3.51% has been registered at auction for the sale of 10.5-year GS. The yield achieved for the same issue at the previous auction on 13 August was 4.12%, while at its opening on 9 January it was 5.35%. This has been the lowest yield for these securities since 2005. The spread to the non-risk according to investors Bunds is 196 b.p.; this being the lowest value since the beginning of the year for long term GS.

All orders totaled BGN 153.2 million, while the amount offered and approved was BGN 55 million, corresponding to a coverage coefficient of 2.79. The overall nominal value of the issue after today's auction is BGN 250 million, which makes it one of the most liquid issues on the domestic market during the current issue year. The distribution by investor type is as follows: banks - 48%, insurance companies - 24%, pension funds - 19% and other institutional investors - 9%. The auction yield is lower than the current yield of 10-year government bonds of a number of EU Member States: Hungary (7.19%), Romania (6.70%), Spain (5.71%), Italy (5.09%), Poland and Lithuania (4.90%), Latvia (4.07%).

The yield of the 10.5-year issue of GS is decisive for the formation of the long term interest rate for assessing convergence - a Maastricht criterion. According to ECB data published on 12 September this indicator for Bulgaria for August was 4.28%, being the lowest level since 2007.

The auction held confirms the significant downward yield trend on the primary market in the whole segment of the debt curve. The great interest of investors reconfirms that the Bulgarian GS are an investment instrument ensuring maximum security level during the continuing EU debt crisis.