20.09.2011

A record decrease of the average weighted annual yield - down to 4,40%, was registered at the auction for the sale of 7-year government securities (GS) held yesterday, 19 September. The achieved yield on the total requested volume of securities is 4,48%. During the previous reopening of the seven-year bond issue (on 15 August this year) the registered yield was 4,53% and the highest yield on this issue was 6,09% registered in May 2010. The achieved yield on the issue is better than the value of the current yield on EUR-denominated Eurobonds with similar residual maturity of Hungary (6,03%) and Turkey (4,83%).

The bids in the auction were for a volume of over BGN 160 million and exceeded nearly three times the offered quantity of BGN 55 million. The result from the analysis of the investor base is very positive - in addition to the banks that have acquired approximately 34,4% of the total requested and approved nominal value, there was a strong interest also from institutional investors, including pension funds (20.8%), insurance and life insurance companies (20.7%) and other investors (24.1%).

This is the fourth consecutive auction for government securities sale which records the lowest yield on bonds with medium-term and long-term maturity. This estimate of market participants presents an important support for the pursued policy of fiscal consolidation and budget discipline.

After the upgrade of the sovereign credit rating of the Republic of Bulgaria to Ваа2 by Moody\'s at end-July, there is a clear trend of reduction of the yield on domestic government debt on the primary market in all maturity segments. Against the backdrop of the high uncertainty on government debt markets in Europe, these results are an appraisal of the investment community of the overall macroeconomic policy in Bulgaria pursued by the government.