09.01.2012

Today, 9 January, the Ministry of Finance held its first for 2012 auction for the sale of GS - issuing bonds with original maturity of 10.5 years. The bond is a priority one as in 2012 it will be used by the European Central Bank as a basis for calculating the harmonized long term interest rate to assess the extent of convergence - a Maastricht criterion.

The Bulgarian long term GS yield has remained stable in an environment of escalating debt markets insecurity in Europe and on the background of increasing financing prices for a number of EU Member States. The average weighted yield achieved at the auction is 5.35% and represents a decrease compared to the first auction for the previous year for bonds with the same maturity - 5.49%. The GS offered for sale amounted to BGN 50 million, while the orders from primary dealers amounted to BGN 136.3 million, the coverage being 2.73. As is the tradition for the long-term maturity segment there has been an increased interest by a broad circle of investors, including banks and other institutional investors. Pension Funds have acquired the greatest share of GS at the auction (49%), banks (35%), insurance companies (10%), and 6% have been acquired by other inventors.

The results of the first for this year auction for the sale of GS confirm the status of Bulgaria as a budgetary disciplined and low risk issuer of sovereign debt. The sustainable positive trends in government debt management allow financing at the optimum for the issuer price which leads to lower government debt service costs. In the long run these trends are also a precondition for maintaining the low tax burden in the country.