16.07.2012

The extremely positive assessment given to Bulgaria by the international investment community in the issuing of the 5-year euro bonds at the beginning of this month was confirmed at today\'s auction by the key local investors on the domestic government securities market. A record low yield was registered in the third reopening of the priority issue with an original maturity of 10.5 years, with demand exceeding supply by almost five times. This auction for the placement of GS on the domestic market held today after the successful return of Bulgaria to the international capital markets is successful in terms of the two key indicators measuring investor confidence, i.e. auction yield and investor interest.

The average annual weighted yield for the approved BGN 40 million is 4.73%. This has been the lowest yield registered in the 10-year segment of the benchmark debt curve since 2007. The yield is significantly below the average yield of 5.35% approved at the auction for the same issue in January and of 4.95% in March. Another positive sign is the fact that the yield registered at today\'s auction marks a sizeable drop against Bulgaria\'s long-term interest rate of 5.07% for June 2012. The yield is also lower than the indicative quotations of the issue on the secondary market.

The auction also registered a record high investor interest from an extremely wide range of investors, i.e. banks, pension funds, insurance and life-insurance companies, trusts and guarantee funds, investment intermediaries, etc. The amount of the offers placed reached BGN 196.35 million, which corresponds to a coverage ratio of 4.91. This has been the highest coverage ratio in the segment of 10-year bonds since November 2010. The highest volume of GS (around 50%) has been acquired by the banks followed by pension funds (around 38%), trusts and guarantee funds (around 11%) and insurance companies (around 1%). After this successful auction the volume of the issue in circulation totals BGN 145 million.

This bond is a reference one in terms of the long-term interest rate for assessing the level of Bulgaria\'s convergence to the EMU. According to the ECB data on the harmonized long-term interest rate for June 2012, the indicator of Bulgaria is lower than that of ten EU members, 7 of which members of the euro area. Bulgaria is along with Latvia and Lithuania. The primary market yield is lower than that of the latest auctions held for bonds of similar maturity in a number of EU members and countries in the region - Hungary (7.82%), Spain (6.43%), Italy (5.82%), Lithuania (5.52%), Latvia (4.75%), Turkey (9.7%), etc.