12.11.2012

The Ministry of Finance (MoF) achieved 2.53% yield on 7-year euro denominated government securities (GS) at the auction held on 12 November 2012. The yield achieved on the approved amount of EUR 30 million is record low for long-term Bulgarian sovereign bonds. The spread to the considered by investors low risk German Bunds is 1.90 p.p. For comparison at the previous auction for the same issue held in September the yield registered was 2.91%, while at its launching in January - 4.45%. The registered at the auction yield is below that of similar bonds in a number of countries: Hungary (5.51%), Slovenia (5.23%), Croatia (4.80%), Italy (4.06%), Turkey (3.13%) and is close to that of Poland (2.24%) and Slovakia (2.07%).

The amount offered for sale was EUR 30 million and the orders had been almost for double of that amount. The distribution by investor type shows the leadership of banks - 89%, followed by pension funds (6%) and investment intermediaries (5%). After this auction the issue totals EUR 125 million.

The overall assessment of the Government policy for fiscal consolidation measured by the continuing downward yield trend in all maturity segments is complemented also by a record drop in the CDS indicator of Bulgaria that has reached its lowest level since 2008. At the beginning of November the risk premium of our country traded on the international markets reached values of about 120 b.p. For comparison at the end of June 2009 this indicator was around 400 b.p. The positive assessment of the macroeconomic policy implemented is complemented also by the published in October 2012 long term interest rate data for Bulgaria which being 3.39% is the lowest monthly value since this indicator has been published for the first time in 2003.