14.01.2013

On 14 January 2013 the Ministry of Finance placed a new issue of 7-year government securities denominated and payable in euro and maturing on 16 January 2020. The bond's interest coupon is 3.50% per annum, with the weighted average annual yield of the auction being 2.54 per cent. The spread compared to German federal bonds is around 150 basis points. The nominal value of the amount offered at the GS auction was EUR 20 million, while the offers placed exceeded EUR 98 million. The bid-to-cover ratio achieved was 4.90 and is the second highest ratio achieved at primary GS auctions in the last two years.

Allocation of GSs per type of investors is as follows: banks - 62.75%, followed by pension funds - 14.48%, investment intermediaries and trusts - 12.64%, while the rest of the securities were purchased by other investors. This bond promoted further the demand for Bulgarian long-term government debt after the extremely successful first reopening of the new benchmark issue of 10.5 government securities at the beginning of last week.

The yield registered at the auction dated 14 January 2013 is below the average one of a number of sovereign bonds with similar characteristics: Slovenia - 5.68%, Hungary - 4.85%, Croatia - 4.50%, Spain - 4.19, Ireland - 4.03%, Italy - 3.49%, etc. For comparison, the yield of the previous 7-year EUR-denominated issue placed in 2012 was 4.45% against a spread of German bonds of 320 basis points.