site.btaBulgaria with New Bond Issue, Achieves Record-Low Costs, Returns to USD Markets After 20 Years

The Ministry of Finance successfully issued bonds on international capital markets in three tranches, denominated in EUR and USD, achieving record-low costs in EUR-denominated bonds and returning to USD markets after 20 years, the Ministry said on its website on Thursday.

The tranches consist of EUR-denominated bonds with an eight-year maturity, totaling EUR 1.75 billion and an interest coupon of 3.625% for the initial tranche; EUR-denominated bonds with a 20-year maturity, totaling EUR 1.25 billion and an interest coupon of 4.250% for the second tranche; and USD-denominated bonds with a 12.5-year maturity, totaling USD 1.5 billion and an interest coupon of 5.000% for the third tranche, the Ministry of Finance said.

Due to oversubscription and robust investor interest, financing costs for the 8-year bonds have significantly decreased, achieving a record low of 135 basis points above the average interest rate swap. For the 20-year bonds, the rate was reduced to 190 basis points.

The first issuance of bonds denominated in USD also garnered substantial investor attention. Throughout the placement process, the spread over benchmark US Treasury bonds was narrowed to 135 basis points.

The triple-tranche bond issuance is part of Bulgaria’s Global Medium-Term Note Programme on the international capital markets. This issuance is particularly noteworthy as it represents the first time since 2002 that Bulgaria has issued bonds denominated in USD on foreign markets.

The Finance Ministry has no intention of re-entering the international capital markets before the end of 2024.

It also noted that the completed transaction aligns with the primary objectives of debt management for 2024. These objectives include securing the necessary resources for refinancing existing debt, funding planned budget deficits, and maintaining the liquidity position of the fiscal reserve.