THE MINISTRY OF FINANCE ACHIEVED A RECORD LOW YIELD OF 1.66% IN THE MEDIUM TERM SEGMENT OF THE DEBT CURVE
The Ministry of Finance has launched a new issue of 5-year BGN denominated Government Securities (GS) maturing on 23 January 2018. At the auction held on 21 January 2013 a yield of 1.66% was achieved, being the lowest ever indicator in the medium term segment of the debt curve. At today's auctions the participants made orders for BGN 126 million while the offer was for BGN 40 million. The analysis of investors shows that in addition to banks which have acquired 37.12% of the approved nominal total, pension funds have shown stronger interest (34.15%), as well as contractual funds and management companies (26.93%). Insurance companies have purchased 1.80% of the issue.
The yield recorded is considerably lower than the current yield on the bonds of a number of EU Member States and countries from the region: Hungary - 5.86%, Slovenia - 5.24%, Spain - 3.87%, Croatia - 3.76%, Rumania - 3.56%, Italy - 2.87%, Lithuania - 2.40%, Latvia - 1.78% and is close to the yield on the 5-year French bonds which is 1.08%. The spread to the German Bunds with maturity in 2018 (yield of 0.63%), narrowed to the record for the medium term maturity 1.03 p.p. The downward trend of the cost of Bulgaria's Government financing after the second half of 2012 is maintained. Third consecutive auction since the beginning of the year has registered a serious drop in the yield on government debt.
This is the first 5-year BGN denominated GS issue since 2009. Then it registered yield of 6.35% at the time of its launching.