Банкеръ Daily


BGN 15 billion external debt of GERB's account

After a few days of silence on September 16, Finance Minister Kiril Ananiev boasted, saying "Outstanding success" for issuing new external debt by selling Eurobonds on international markets. And from the point of view of the procedure itself, Ananiev is probably right. The assessment of some financial experts is that the government has indeed achieved good terms for the sale of bonds. On the 10-year treasury notes, the yield was 0.389%, and on bonds with a maturity of 30 years - 1.476%. The total amount of the two tranches is BGN 5 billion.


For comparison, in the last two sales of bonds on international markets - in 2015 and 2016, yields of 0.72% and 0.94% were achieved, respectively. Thus, within two governments with a mandate of GERB, the foreign debt increased by about BGN 15 billion.



There are a few more details that justify Ananiev's satisfaction. First, there was strong interest in issues, with the final size of the procurement register reaching € 3.7 billion for 254 applications for the 10-year tranche and € 3.6 billion for 236 applications for the 30-year tranche. Investors from all over Europe have shown interest in the issue, including serious investors such as fund managers and banks, and 16% of the total volume of securities has been acquired by Bulgarian investors.


The Ministry of Finance did not fail to note that this is the second largest debt placement deal of the government, as the 10-year bond has achieved the lowest coupon, respectively yield and spread.


Separately, 30-year Eurobonds have the longest maturity issued by our country. "This issue complemented bulgaria's sovereign debt yield curve and increased the liquidity of Bulgarian debt," the ministry said.


However, the bitter taste of this endeavor remains.


Precisely because this money will not get into the economy. Something that was expected and predetermined.


According to the base prospectus of the issue, the funds will be used to increase the fiscal reserve, which according to the latest data amounts to BGN 10.14 billion. Some of the funds will be used to finance the planned budget deficit at the end of the year, while another will be used to pay down debts and address the effects of Covid-19.


At the end of August, the treasury reported again a


surplus of BGN 1.5 billion.


However, the August result only shows that it is already in deficit.


According to the budget update, it will end the year with a deficit of BGN 3.5 billion. This means in practice that in the next three months the traditional big expenses for the end of the year will be relied on again, but the tense political situation is obviously not taken into account and the fact that the cabinet may not be able to withstand criticism from various representatives of the European institutions. By the way, it will not be a surprise if another budget update is reached at the end of the year.


According to government accounts


the package of "socio-economic measures" related to the crisis is estimated at BGN 1.162.9 billion. The social measures amount to BGN 731.5 million and the economic ones to BGN 431.4 million. The national budget is indicated as a source of funds for their financing.

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