Bulgaria Finance Ministry Prepares New Securities Auction

Bulgarian Finance Minister Simeon Djankov has announced the second auction of government securities within a week. Photo by BGNES

A new auction of government securities (GS) will be held on Friday, February 26, according to Finance Minister Simeon Djankov.

The issue will have a nominal value of BGN 30 M, with maturity fixed over a period of 10 years and 6 months. The bonds are due to mature on July 13, 2020 and pay a fixed interest of 5%, paid every six months. The date for payment was not announced in Wednesday’s statement, but is expected to be March 2.

The reason given by the Finance Ministry for holding Friday’s new auction was the great success of the similar one held on February 22, where the weighted average yield on the securities was 5,82%, with a high of 5,86% and a low of 5,70%.

These yields compared favorably with German securities of the same maturity - which are considered risk-free, and provided a good premium, according to investors.

Orders were submitted for more than BGN 90 M against the announced nominal face value of BGN 30 M. The ratio of orders submitted to securities sold, a major benchmark for participants in this type of auctions, was 3,26% - one of the highest in more than a year.

A dealer from a large Bulgarian financial institution commented that it was probably because of the large demand shown at the beginning of the week that the Finance Ministry was launching a second auction in such a short time.

For its part, the Ministry stated that on February 22, for the first time, the pre-crisis average yield on the maturity of its debt had been reached.

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