18.10.2011

The auction for the sale of 5-year EUR-denominated government securities (GS) held yesterday, 17 October, reaffirmed the distinct trend of Bulgaria's stable and predictable status as a government debt issuer. After the reduction of the yield on all maturity segments of the debt curve, evident since August 2011, this auction reaffirmed the objectivity of the lower levels of yield on GS placed on the domestic market. The average weighted yield on the approved volume of securities - for EUR 35 million, is 3,93%. When the issue was launched in March 2011, its registered yield was 4,16 %. During the next two issue reopenings in May and July this year the yield was 4,10% and 4,16%, respectively.

The spread as compared to the German risk-free debt securities with similar maturity has dropped to the lowest level on a primary market - 2,73 percentage points, since the beginning of the debt crisis. The difference in the yield between Bulgarian and German benchmark securities is below the indicator measuring a country's default risk (5Y CDS), which is an indicator for the absence of a risk add-on in investors' medium-term assessments.

The average weighted annual yield during the action is also below the current yield on the EUR-denominated Eurobonds with similar residual maturity of Hungary (6,65%), Turkey (4,67%) and Lithuania (4,40%), as well as below the yield on the benchmark debt issues with similar characteristics of Italy (5,37%) and Spain (4,52%).

All groups of investors in government debt took part in the auction, the total volume of bids being EUR 72,4 million. The achieved coverage ratio is 2,07 and is the highest one achieved at the last three auctions for placement of the 5-year EUR-denominated GS issue.

The sustainable trend of a stabilizing yield on the government securities market, as well as Bulgaria's independent external assessment by the Institute on International Finance, based in Washington, show a low level of vulnerability to imported external risks and affirm Bulgaria's overall position of one of the most stable EU countries in fiscal terms.