site.btaFinance Ministry Successfully Prices EUR 2.25 Bln Dual-Tranche Bond Issue

Bulgaria successfully priced a dual-tranche Eurobond issue worth a total of EUR 2.25 billion on the international debt capital markets on September 15, the Finance Ministry said on Friday. It is not planning another debt issuance on the international markets until the end of 2022.

The EUR 1.5 billion 7-year tranche with coupon of 4.125% and the EUR 750 million 12-year tranche with coupon of 4.625% are part of the Global Medium Term Note Programme, with EUR 2.1 billion remaining until the Programme limit is reached.

The cap on new debt for 2022 has been set at BGN 10.3 billion. The debt issued so far this year amounted to BGN 1.8 billion in the form of government securities offered on the domestic market between March and May.

The two Eurobond tranches bring the total government debt to BGN 34.5 billion (according to the national methodology), 22.9% of the projected GDP.

The marked trend for inflation acceleration in the EU and globally in the second half of 2022, leading to monetary tightening by the central banks of the major economies, and the unfavourable prospects for a slowdown or decline in economic activity are among the key factors determining the current state and dynamics of the international financial markets in which the transaction was executed. In the months ahead, the cost of, and access to, debt financing will be increasingly challenging to sovereign debt issuers in light of the ongoing geopolitical uncertainty, high inflation and the European Central Bank's and Federal Reserve's policy of further increases in key interest rates.

The Eurobond issue is one of the budget financing instruments used by the Finance Ministry, in line with the main objective of debt management - financing the planned deficit of BGN 6.2 billion (4.1% of GDP) for 2022 under the Consolidated Fiscal Programme, providing the funds needed to refinance the outstanding debt, and ensuring the statutory levels of the fiscal reserve.

After the transaction, Finance Minister Rositza Velkova commented: "In line with the 2022 budget adopted by the National Assembly, the caretaker government must provide the necessary liquidity to ensure the budgeted expenditures, which are planned to exceed the planned tax revenues. The result we have achieved as an issuer reflects the rising cost of funding in the international markets amid global economic and political uncertainty."