site.btaBulgaria Successfully Places EUR 2.5 Bln Worth of Bonds

September 16 (BTA) - Bulgaria successfully placed 2.5 billion euro worth of bonds, Finance Minister Kiril Ananiev said on Wednesday. The money will be used to refinance the country's debt, increase the fiscal reserve, finance social and economic measures against the COVID-19 crisis, and support the recovery of the national economy.

The placement was performed in two tranches of 1.25 billion euro each, with maturity periods of 10 and 30 years, respectively. The yield on the 10-year bonds was 0.389 per cent, and on the 30-year bonds, 1.476 per cent.

The average price of the 10-year bonds is 99.863 euro, their coupon rate is 0.375 per cent and their swap spread is 60 basis points (yield: 0.389 per cent). The parameters for the 30-year bonds are as follows: an average price of 99.566 euro, a coupon rate of 1.375 per cent and a swap spread of 145 basis points (yield: 1.476 per cent).

The lead managers were BNP Paribas, Citi, JP Morgan, and UniCredit.

Availing itself of the current favourable market conditions and recognizing the scarce investment opportunities in its risk segment, Bulgaria returned to the international capital markets after being absent for over four years following the latest bond issue of March 2016.

The bond mandate was announced on September 14 during a global investor conference call and discussions with individual investors within the same day. Seeing that investor support was strong and the procedure started positively, the Finance Ministry decided to proceed to the stage of setting initial price thoughts (IPTs) on September 15. The levels were set at MS+ 95 bps for the 10-year issue and MS+ 175-180 bps for the 30-year issue.

For the 10-year bonds, investors made 254 subscriptions totalling 3.7 billion euro, and for the 30-year bonds, there were 236 subscriptions totalling 3.6 billion euro. Investors from all over Europe, mainly fund managers and banks, showed interest in the issues.

Investor interest was, indeed, unprecedented, and the total subscribed amount was four times the 2 billion euro initially offered by the Finance Ministry, Ananiev said. Therefore, the limit was increased to 2.5 billion euro.

The expenses for servicing this new debt will be lower than those for previously assumed debts, Ananiev noted, adding that the interest rates are far lower than the initially projected rates.

According to the Finance Minister, Bulgaria does not plan to go out again on the international financial markets this year. He recalled that the government's medium-term programme had set a limit of 8 billion euro on possible new debt, which was later increased to 10 billion euro. Until the beginning of this year, the country assumed 5.144 billion euro in new debt, and now it has assumed another 2.5 billion euro, putting the aggregate amount at 7.644 billion euro. For the 2.356 billion euro remaining until the limit, no moves are planned with regard to international financial markets this year. RY/VE
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