Bulgaria Sells €4 Billion In Bonds, Its Biggest-Ever Euro Debt Haul

Bulgaria sold a total of €4 billion ($4.5 billion) in bonds, its biggest ever haul of euro-denominated debt in a single day, to fund its growing budget deficit in preparation for euro adoption.

The Balkan country priced a deal for €2.25 billion in 9-year bonds and €1.75 billion in 13-year securities on Monday, according to a person familiar with the matter who asked not to be identified.

Prime Minister Rosen Zhelyazkov's minority government is looking to secure funding for its budget gap, set at 3% of economic output for this year, as well as to increase the capital of state-owned companies. The budget bill allows the cabinet to take on new debt of as much as 18.9 billion lev ($11 billion) in local and international sales. It has already sold 1.8 billion lev in securities on the local market.

Bulgaria last offered bonds on the international markets in August, when it sold an all-time record of $4.8 billion in a three-part combined euro- and dollar-denominated deal. Monday's is the largest ever in euros alone.

Tighter spread

The 9-year bonds with annual coupon of 3.5% were sold at mid-swaps plus 125 basis points, with books above €4.9 billion, according to the person. For the 13-year bonds, with coupon of 4.125%, the pricing was at mid-swaps plus 175 basis points, with books above €3.6 billion. Both bonds are at tighter spreads compared with the initial price talk.

With one of the European Union's lowest debt-to-GDP ratios and a history of fiscal discipline, Bulgaria is awaiting in June an assessment by the European Central Bank and the European Commission that could open its path to adopt the euro early next year.

A protracted political crisis, with seven elections over four years, has delayed euro adoption and has raised budget deficits to the edge of European Union limits.

Citigroup Inc., ING Groep NV, JP Morgan Chase & Co. and UniCredit SpA ran the two-part sale.

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