Bulgaria sells EUR 17.8mn in three-year bonds, yields rise

By bne IntelliNews July 2, 2013

Bulgaria sold BGN 35mn (EUR 17.8mn) worth of three-year Treasury bonds with an annual coupon of 1.5% at an auction held on Monday, July 1, the central bank said. The average yield rose to 1.64% from 1.32% in the previous such auction held in April.

Demand at the July 1 auction amounted to BGN 69.5mn, resulting in a coverage ratio of 1.99 - down from 3.59 in the previous auction.

Bulgaria's bond yield curve has been mirroring the development of the political situation in the country. Yields began rising in March as the perceived risk rose with the mass protests that led to resignation of the government. Then, around the time of the snap elections in May, yields fell as political risk declined. However, uncertainty increased once again as a new wave of protests, this time against the new government, has continued for more than two weeks now.

Part of the increase of the yield in the latest auction may also be attributed to the global bond market development, following the US's Federal Reserve conference from June at which the c-bank announced its intentions to begin slowly pulling out its bond-market intervention.

Bulgaria's next government debt auction is planned for July 22 when the finance ministry will offer ten-year and six-month securities worth a combined BGN 50mn (EUR 25.6mn).

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