Банкеръ Weekly



EUROBANK became the second credit institution in Bulgaria after First Investment Bank that has launched its bonds abroad. On September 10 it sold out its entire 3-year issue, worth EUR5MN. The annual yield is 7.50%, payable on a quarterly basis. The principal of EUR5MN will be paid up entirely on the day of maturity, September 10, 2007. The 7.50% interest is doubtlessly a success for EUROBANK because the bonds are corporate, i.e. they are not guaranteed by anything else but financial stability, which the bank managed to demonstrate in front of international financial institutions and the B1 rating, granted to it by Moody's. At the same time it should be noted that this is a debute issue abroad and in order to attract investors it must offer a good yield. The fact that EUROBANK is not among the big Bulgarian financial institutions should not be ignored either. Its assets totalled BGN347.35MN by June 30, and its equity capital was only BGN23.01MN. Nevertheless, after the roadshow, presenting the bonds in London in February and March, the international investment funds and banks showed considerable interest to the issues, Yuriy Stanchev, Member of EUROBANK Management Board and Director of Treasury department, commented in front of the BANKER weekly. The private offering of the securities was organized by the investment bank NBGI - London, which is a subsidiary to the National Bank of Greece, specialized in the trade in debt bonds. After negotiations with various institutions, the best parameters for EUROBANK bonds were offered by Argo Fund - London, which bought out the entire issue. This is the fund of Argo Capital Management Ltd., London, specialized in the trade in bonds and shares, issued by companies in Central and Eastern Europe, and Russia. During the negotiations with Agro Fund EUROBANK has not undertaken to spend the money for a special purpose and can use it for whatever it likes, and the investor may not meddle in its decisions. In this case the EUR5MN will be invested in expanding the operation of the credit institution. The fund, on its part, may sell the bonds at any time, but not on any of the international stock exchanges, as the issue shall not be public because its size is too small, Mr. Stanchev explained. Principally, the requirement of the specialized stock exchange for trade in bonds in Luxembourg is that the issue is worth at least EUR50MN. We have fulfilled our 2004 plan for collecting money through debt securities, Mr. Stanchev noted. The issue was the second one for the bank and is in accordance with the shareholders-approved rights of its Management Board to organize the issuance of bonds amounting to BGN20MN. On July 19, 2004, the credit institution launched its first 5-year issue, worth BGN7MN, and bearing a 6.375% yield. These were the first bonds in Bulgaria, guaranteed by long-term government securities, issued under ZUNK (the Bulgarian acronym for the Act on Settlement of Non-Performing Credits, Contracted Prior to December 31st, 1990), and will be traded on the Bulgarian Stock Exchange.

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