Bulgaria Raises 290 Million Euros in Schuldschein Loans

Bulgaria obtained 290 million euros ($399 million) in so-called Schuldschein loans to help service debt payments and increase fiscal reserves.

The government raised 156 million euros in a 15-year loan with an average interest of 4.6 percent, 103.5 million euros in a 10-year credit at 4.1 percent and 30.5 million euros in a 7-year loan at 3.397 percent, the Finance Ministry in the capital Sofia said in an e-mailed statement on Dec. 14. The government’s initial plan was to borrow 360 million euros, the ministry said on Nov. 7.

Austrian and German institutional investors offered most of the credit, according to the ministry. Deutsche Bank AG, Raiffeisen Bank International AG and UniCredit Bulbank AD helped managed the transaction, the ministry said. Schuldschein loans are promissory notes issued privately under German law.

The minority cabinet of Prime Minister Plamen Oresharski revised the budget in August, widening the deficit to 2 percent of gross domestic product from the previous 1.3 percent to cover increased social spending and service debt payments. Oresharski came to power on May 29 after anti-austerity protests forced out former Premier Boyko Borissov’s Gerb party and triggered a snap election.

Bulgaria plans to sell about 1 billion euros of Eurobonds next year to repay maturing debt, Oresharski said in an interview on Nov. 12. Bulgaria’s public debt amounted to 17.7 percent of GDP at the end of October.

Standard & Poor’s on Dec. 13 revised its outlook for Bulgaria to negative from stable, citing slow economic growth prospects, high unemployment and political uncertainty. The rating company affirmed its BBB sovereign debt rating for the country, the same level as Russia, Brazil and Lithuania. Bulgaria’s debt is rated Baa2 by Moody’s Investors Service and BBB- by Fitch Ratings.

The yield on Bulgaria’s euro-denominated bonds due 2017 fell 2 basis points to 1.834 percent at 10:15 a.m. in Sofia. The cost of insuring the country’s debt against non-payment for five years using credit-default swaps rose four basis points to 124.

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