29.11.2011

Yesterday, 28 November, for a second time in a two-month period the Ministry of Finance successfully conducted an operation of buying-back of government securities without a specific term by means of their replacement with GS from another issue.

Similarly to the previous auction, as subject of the buy-back (the source bond) the Ministry of Finance offered an issue with original maturity of 5 years and residual maturity as of the date of the transaction of 2 months (the maturity date being 24.01.2012); the settlement bond was a ten-year one issued on 4 January 2006 (the maturity date being 4 January 2016) with residual maturity as of the date of the transaction of 4 years and 1 month. The nominal value of orders requested and approved, respectively, is BGN 31,09 million. The buy-back prices offered at the auction are comparable with the indicative market quotations for issue 300/2007. Participants in the auction were banks and institutional investors, holders of securities from that issue.

After the replacement transaction the total volume of bought back government securities from issue 300/2007 reached BGN 56,3 million, the volume of the issue in circulation  thus being reduced to BGN 238,7 million from BGN 295 million. These debt replacement transactions result in reduction of the payments due in January 2012.

After the auction for GS replacement without any cash flow movement the volume of issue 400/2006 increased to BGN 201.09 million from BGN 170 million, contributing to the liquidity of the securities on the secondary market. The coupon of the GS from that issue, amounting to 3,5%, is the lowest interest coupon under the long-term GS that are in circulation.

The Ministry of Finance intends to continue conducting such debt management operations, and the active involvement of market participants in them is in itself support for the government\'s efforts in this area.