Bulgaria Govt Hires Four Banks to Manage 2015-2017 EUR 8 B Bond Programme

Citigroup, HSBC, Societe Generale and Unicredit have been selected by Bulgaria’s government to manage its global medium-term bond programme worth EUR 8 B, according to a new draft bill now before Parliament.

Bulgaria’s minority coalition government that took office in November 2014 plans to raise EUR 3.5 B from foreign lenders this year to roll over the repayment of a EUR 1.5 B loan and finance the 2015 budget deficit projected at 3% of GDP.

The four banks extended a six-month bridge loan of EUR 1.5 B to Bulgaria in December 2014 to plug a gap at the state-run Deposit Insurance Fund, which is in charge of repaying deposits at collapsed Corporate Commercial Bank, or KTB.

The fresh borrowing will increase Bulgaria’s public debt-to-GDP ratio to 28.4% this year from a preliminary 27.1% at the end of December 2014 and 17.9% a year earlier. Government debt increased to EUR 11.3 B in nominal terms at the end of December 2014 from EUR 7.2 B a year earlier, according to preliminary estimates of the Finance Ministry.

Moody's Investors Service last week assigned a provisional Baa2 rating with a stable outlook to Bulgaria’s global medium-term (2015-2017) bond programme which will be listed on the Luxembourg Stock Exchange.

The bond programme provides Bulgaria, as an issuer, with an opportunity to apply a flexible approach in the selection of debt markets, instruments, maturity and currencies.

The provisional Baa2 rating on the bond programme “mirrors the Government of Bulgaria's Baa2 (stable outlook) issuer rating, which reflects its weak economic growth outlook in an environment of moderate credit expansion and persistent unemployment, challenges related to its banking system, and its high fiscal strength, with low government debt and a track record of maintaining fiscal reserves,” Moody’s said in a statement. 

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