06.03.2012

At the auction for the sale of 7-year GS denominated in euro held on 5 March the Ministry of Finance has achieved a record breaking yield drop. The weighted average of the annual yield of the approved GS amount of EUR 30 million is 4.21%. This is the lowest yield for 7-year Bulgarian government bonds. The yield of the total securities amount of EUR 100.4 million is 4.32%, which is lower than the average approved yield of 4.45% for the issue at the time of its issuance in January 2012.

The yield of the auction is considerably lower than that of the Euro Bonds with similar residual maturity of a number of EU countries and in the region: Hungary (8.15%), Croatia (7.13%), Turkey (5.09%), Slovenia (4.86%), Spain (4.27%) and is close to Slovakia (4.11%) and Poland (3.80%). The realized spread to German government bonds with similar residual maturity is also decreased compared to the previous auction for the issue.

The market participants showed great interest in the auction and demand was almost three and a half times higher than the GS amount offered for sale, the coverage coefficient reached 3.35. The investor base analysis shows the leading position of pension funds -55% of the nominal approved, followed by banks -25% and insurance companies -19%.

The observed since August 2011 downward yield trend along all segments of the debt curve is indicative of the Government achievements in the public finances field and of the investor confidence in the fiscal policy implemented. The auction held yet again strengthens the trend of lowering the price of financing the state in the domestic capital market. When implementing its issuance policy the Ministry of Finance will continue to take account of the increased investment community interest in the offered by the Government debt instruments.