Bulgarian Government Announces Strategic 2010 Bond Issues

The Bulgarian government has announced its strategic plans for bonds issues for 2010, and has discussed the possibility of issuing Euro-bonds for increased profitability. Photo by BGNES

The Bulgarian government will issue securities to the value of BGN 740 M in 2010, of which net financing will amount to some BGN 150 M, according to a Finance Ministry announcement made on Monday.

This should mean the maturing of about BGN 590 M worth of bonds, an amount that should ensure that the private sector will not be deprived of access to loan resourcing.

The government plans to issue 2- and 4-year bonds, and avoid the sale of 3- and 5-year securities. The intention is to harmonize the maturity of such bonds with the redemption periods in 2013 and 2015 of global bonds held by Bulgaria.

However, a focus on 10-year bonds will be maintained, and in 2010 7-year bonds will also be traded off. The Bulgarian state will cease issues of 3-month short-term securities, given the significant amount of the fiscal reserve.

In January 2010, the first two auctions of 5- and 10-year bonds will be held, with the aim of raising BGN 65 M. There has been no mention, to date, of the issuing of bonds on the international market.

Following a closed meeting on Monday afternoon between Simeon Djankov, Minister of Finance, Kalin Hristove, Deputy Governor of the Bulgarian National Bank (BNB), and other senior economists, a recommendation emerged, supported by macro-economists and financial consultants, that the bond issues should be made in Euro rather than in Bulgarian leva – a strategic move that was seen as likely to be more profitable for the Bulgarian government.