(Bloomberg) — Bulgaria sold bonds on international markets for the third time in 14 months as it seeks to cover its deficit and pay down debt ahead of possible euro zone membership.
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The Sofia government sold 1.3 billion euros ($1.4 billion) of bonds maturing in 2031 and another 1 billion euros of 2036 notes, according to a person familiar with the matter, who asked not to be identified. The combined sale generated orders of more than €6.5 billion.
Bulgaria must finance a budget deficit estimated at 2.5% of its economic output this year, in order to keep it within the European Union criteria needed to join the euro in early 2025.
The Balkan country last tapped international markets in January, selling 1.5 billion euros of 10-year bonds, and may offer up to another 2.3 billion euros by end of the year, according to this year’s budget bill. The government, which must repay 1.5 billion euros of 10-year debt maturing next year, acquired the entire amount.
Prime Minister Nikolai Denkov’s coalition cabinet took office five months ago, uniting longtime political rivals with a desire to advance the eurozone and Schengen accession processes and keep the country on track. the European path in a context of political and economic crisis aggravated by Russia. war in Ukraine.
For years, Bulgaria has met the formal criteria for adopting the euro, with relatively low deficits and the second lowest debt level in the EU. However, it may struggle to meet its inflation target as Russia’s invasion of Ukraine has driven up energy prices globally and locally.
On Thursday, the government raised this year’s harmonized average annual inflation estimate to 9.1%, up from 8.7%. She expects it to fall to 4.8% next year.
Last month, Fitch affirmed Bulgaria’s long-term foreign currency debt rating at BBB, on par with Peru and Kazakhstan, with a positive outlook reflecting prospects for euro adoption.
(Adds details on offer price, starting in first paragraph.)
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