20.03.2017

The Ministry of Finance has reopened an issue of 10.5-year BGN-denominated government securities (GS) maturing on 25 July 2027. GS of BGN 100 million were offered successfully at the auction held on 20 March at a weighted average yield of 1.80 per cent. The subscribed amount totalled BGN 192.25 million, which corresponds to a bid-to-cover ratio of 1.92. The spread to the 10-year German Bunds in this segment is 137 basis points.

After this auction the issue of 10.5-year GS will total BGN 150 million, which is within the limit set in the 2017 State Budget of the Republic of Bulgaria Law as regards the issue of GS on the domestic market and is in accordance with the 2017 issue policy. The auction results are favourable for the reduction in the debt service costs, with the issue being a benchmark in 2017 with regard to the harmonised long-term interest rate evaluating the convergence level, which is one of the Maastricht criteria.

The bidders showed great interest both in the quantity offered for competitive sale and in the non-competition part allocated among the investors. The biggest amount of GS was acquired by pension and guarantee funds which traditionally show great interest in long-term GS (47.28%), followed by banks with 27.40%, insurance companies with 15.32% and investment intermediaries with 10%.