26.11.2012

The Ministry of Finance registered 3.45% yield on the priority issue of 10.5-year government securities (GS) at the last for the 2012 issue year auction. This is the lowest yield ever in the 10-year maturity segment. The amount of bonds offered at the auction was BGN 55 million while the orders amounted to BGN 74.35 million. Strong was the presence of banks primary dealers which acquired around 71% of the bonds offered, pension funds -22%, and other institutional investors - 7%.

For comparison, the yield of the issue when it was launched on 9 January 2012 was 5.35%, the drop at the end of the period being 190 b.p. The lower risk premium required by investors is indicative of the positive appreciation of Bulgarian SG as an appropriate for investment financial instrument. The yield achieved at the auction is below the current yield of sovereign bonds with similar characteristics of a number of EU Member States and countries from the region- Poland (4.17%), Ireland (4.40%), Italy (4.75%), Hungary (6.82%) and Turkey (7.12%).

The spread to the considered as non-risk Bunds preserves its low levels of around 200 b.p. The issue has been reopened six times this year and presently it totals BGN 305 million. This confirms its benchmark status and guarantees its high liquidity on the secondary market.