Банкеръ Weekly



Bulgarian Eurobonds caused huge interst on the part of investors. Within the first week of their issuance alone, deals in securities worth a total of EUR10MN, were closed. Clients purchased these stocks mainly to invest their free money. High demand resulted in an increase of their quotations, which picked up by more than 0.6% within the five working days of the week. Interest towards ZUNK bonds was significant as well. The total amount of deals in them exceeded USD10MN. These securities, however, we mainly traded by banks and finance houses, counting on a speculative profit from the deals and not on the yield which ZUNKs bear. On the background of this turnover, the transactions in the Eurobonds, issued by the Sofia Municipality during the week, seemed negligible - worth some EUR100,000.With the decrease of the interest rates on deposits in euros and US dollars, investors' interest (of both firms and natural persons) redirected to securities, put up for sale on the local market. The highest demand was for ZUNKs, denominated in US dollar and euros, and for the Eurobonds issued by the Sofia Municipality and by the Republic of Bulgaria.The Eurobonds issued by the Sofia Municipality will mature on June 3, 2002, and the ZUNKs' term of maturity is the longest - January 1, 2019. It is interesting to know that on January, each year, 5% of the principal is paid. The annual yield of the municipal Eurobonds is about 7.15%, and that of the ZUNKs is around 7.6 per cent.Another essential thing is that these bonds are quoted without including the accrued interest (the so-called net price), but when a transcation is closed the accrued interest is calculated by the date of closing the deal and is added to the net price. The resultant price is called gross price.Which instruments are the most lucrative investment?The assessment is made on the basis of the currency in which the securities are denominated - euros of US dollars - and on the term of the investment. The opportunities for investment in US-denominated bonds in Bulgaria is limited to the ZUNKs, while possibilities for investments in euros are much greater. For several months now there are two issues of euro-denominated mortgage bonds on the local market: those of Bulgarian-American Credit Bank and of First Investment Bank.The expenses in such investments are not great. Each bank has a different tariff and most of them do not charge commissions for closing deals, while the fee for maintaining a register does not exceed 0.2% per year on the basis of the invested amount.

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