14.12.2013

The placement of the three loans among first-class German and Austrian investors shows their long-term engagement and trust in Bulgaria\'s creditworthiness

The Republic of Bulgaria has successfully completed the private placement of the assignable \"Schuldschein\" loans. The loans are with maturities of 7, 10 and 15 years and volumes respectively of EUR 30.5 mln. with annual interest rate 3.397% for the 7-year loan, EUR 103.5 mln. with  annual interest rate 4.10% for the 10-year loan and EUR 156 mln. with annual interest rate 4.60% for the 15-year loan. The investor demand exceeded the initially determined maximum volume of the loans. In view of the high demand on the domestic government securities market and the government debt limits the Ministry of Finance decided to approve a total amount of EUR 290 mln. for the three loans. Joint lead arrangers are Deutsche Bank (acting also as a payment agent) and Raiffeisen International (acting also as a bookrunner). UniCredit Bulbank participates in the transaction as a co-lead manager.

Bulgaria is the first country from the SEE region and the second one in CEE, which successfully uses this private placement instrument for investment-grade sovereign issuers.  While in Western Europe \"Schuldschein\" is a traditional financing instrument, up to now in CEE this alternative financing has regularly been used by Poland. Thus, Bulgaria\'s admission to the Schuldschein borrower\'s club is a form of recognition of the country\'s creditworthiness and is a serious signal of trust from the demanding investor community. With the successful placement of the assignable loans Bulgaria managed to attract first-class investors from Germany and Austria, which acquired a significant portion of the loans and thus contributed not only to long-term financing at the currently attractive interest rates but also to the diversification of the investor base.

With this private placement the yield curve of Bulgaria has been extended into the 15 year maturity range by a product that is not subject to market volatility.  Moreover, the 15-year loan amounts to EUR 156 million, which represent more than 50% of the transaction volume. The concentration of investors at the long end of the yield curve underlines their strategic commitment to Bulgaria and facilitates the optimization of the maturity profile of the sovereign debt of the country.