Bulgaria to borrow 900M leva on internal market in January

Written by on January 3, 2014 in Bulgaria - No comments

Bulgaria’s Finance Ministry plans to borrow 900 million leva (about 460 million euro) on the domestic bond market in January 2014, according to the auction schedule announced by the ministry.

The ministry said it would offer 400 million leva worth of six-month government notes in an auction on January 6 and another 400 million leva worth of nine-month government notes in an auction on January 27.

According to a report in Bulgarian daily Sega, the bulk of the funds raised in these two auctions would go towards paying farming subsidies early, well before their May deadline. However, when the country’s previous cabinet carried out the same exercise in 2013, the two parties now in government criticised it as potentially damaging to the Bulgarian economy, the newspaper said.

This time around, according to the head of Parliament’s budget committee Yordan Tsonev, quoted by the daily, there was no danger to public finances because “there is enough liquidity on the internal market.”

Although the newly-issued notes will count towards the borrowing limit imposed by the 2014 Budget Act, which allows borrowing up to 4.4 billion leva this year, they will have no impact on the debt ceiling (set at 18 billion leva, or about 9.2 billion euro) because the short-term notes will have been repaid by the time Bulgaria is expected to tap into foreign markets at the end of the year to refinance debt due in January 2015.

The country’s government debt, according to the latest data for November 2013, was 6.8 billion euro, or about 16.8 per cent of the gross domestic product projection for 2013. The end-year figure is expected to be higher after Bulgaria borrowed 360 million euro as Schuldschein loans – private debt placements under German law – in December 2013.

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