28.02.2012

The Ministry of Finance reopened the medium-term EUR benchmark with an original maturity of 5 years at an auction held yesterday, 27 February 2012. On 13 February 2012 the Ministry held an extremely successful auction for this issue and due to the great investor interest decided on a reopening of the issue later on in the month. The issue was placed on the market at the end of March 2011 and its current residual maturity is 4 years.

The weighted average annual yield of the GS volume of EUR 34.5 million approved yesterday by the Ministry of Finance is 3.50%. After this auction the total par of the placed issue has reached EUR 213.5 million. In the conditions of increased bond offering, auction demand remained high and exceeded the amount offered for sale, with the par value of offers being for over EUR 78 million. The yield of competitive bids reached 3.56%, registering a reduction compared to the previous issue auction (3.58%).

The auction yield is lower than that of the bonds of similar maturity of a number of countries with sizeable presence on debt markets such as Italy - 4.79%, Poland - 5.02%, Turkey - 9.52%, Lithuania 5.84% and Romania - 6.75%. As in the previous auction, analysis of the investor base shows a leading position for the banks acquiring 76% of the approved volume of GS, followed by pension funds with 14%.

Sound performance on the sovereign debt market and public finance stability outline Bulgaria from the rest of EU Member States and countries in the region as an austere debt issuer. These positive trends help reduce debt service costs, which is also a precondition for preserving the low tax burden in the country in the long run.