Bulgaria Secures 2.3 Billion Euros in International Debt

Finance | November 7, 2023, Tuesday // 12:17|  views

Bulgarian National Bank

Bulgaria has achieved a significant milestone in its fiscal management by successfully raising an external debt of 2.3 billion euros through two separate issues on international markets. This strategic financial move not only indicates Bulgaria's solid standing in the global financial landscape but also plays a pivotal role in covering old debts and managing the national deficit.

The Ministry of Finance, which traditionally follows up with an official announcement after such offerings, is set to provide additional details regarding this important transaction.

The 2.3-billion-euro debt is divided into two distinct tranches, each with varying maturity periods. The first tranche is set to mature in 7.5 years, while the second has a more extended horizon of 12.5 years. The choice of issuing bonds with differing maturities allows Bulgaria to optimize its debt management strategies and balance its repayment obligations over time.

The success of this debt offering can be attributed to several key factors. One major factor is the timing of the offering, which was characterized as "chosen at a very good time." The debt was issued at a point where financial spreads were relatively narrow, translating into lower borrowing costs for Bulgaria. This favorable timing reflects a prudent decision that will benefit the country economically.

Bulgaria's ability to raise this substantial debt is a clear indicator of the country's strong financial reputation and the confidence that global investors have in its economic prospects. The successful offering showcases Bulgaria's commitment to sound fiscal policies, effective debt management, and overall economic stability.

This marks the second external debt issuance by Bulgaria this year. The first occurred in January at the service cabinet. However, the current issuance is not only larger in scale but also more cost-effective. Minister of Finance Asen Vassilev stated that Bulgaria successfully raised the seven-year debt at a premium of 150 basis points. This represents a competitive and favorable pricing compared to the previous issue, where the premium was over 2.25%, marking significant progress in reducing borrowing costs.

The funds raised through this offering will be instrumental in financing the country's deficit and refinancing maturing debt that comes due in the next year. In essence, it enables Bulgaria to effectively manage its debt portfolio and secure resources needed for various government programs and initiatives.

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Tags: debt, Vassilev, Bulgaria


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