Transition to the Euro: What Happens to Bulgarian Government Securities

Once Bulgaria adopts the euro, all government securities currently denominated in levs will be automatically converted into euros as of the official introduction date. This conversion will take place by law, ensuring that the transition is smooth and consistent across all financial instruments. The process is designed to uphold fairness and prevent any party involved in such transactions from being disadvantaged by the currency change, maintaining both equality and transparency throughout financial operations.

For securities and financial instruments that carry a fixed interest rate, the same nominal interest rate will remain in effect even after the conversion to euros. This means that the core terms and conditions of those instruments will not be altered, ensuring continuity for investors. The issuer of the security will apply a specific methodology to recalculate the interest payments in euros so that they are fully equivalent to the payments that would have been made in levs on the conversion date. This approach guarantees that no one will receive less favorable conditions due to the currency transition.

When it comes to securities with variable interest rates, the adjustment will follow the provisions outlined in the Euro Adoption Act. The conversion methodology for these instruments will also be defined by their issuer, who must ensure that the euro-denominated interest payments correspond exactly to the value of those originally calculated in levs at the moment of transition. The goal is to preserve the economic balance and ensure that all participants in these financial instruments retain the same value of returns after the adoption of the euro.

In both cases, fixed and variable interest rate instruments, the key principle guiding the process is equivalence. The value and conditions of all payments, obligations, and rights must remain unchanged after conversion. This approach guarantees a stable and predictable transition for Bulgaria’s financial markets as the country moves from the lev to the euro.