The Financial Times

By Theodor Troev

Bulgaria's parliament is expected to pave the way for improving the country's foreign debt position this week by ratifying restructuring contracts with JP Morgan and Salomon Smith Barney.

Finance ministry sources in Sofia revealed that the contracts had been approved by the government and were expected to be passed by parliament's economic and budget commissions.

The beginning of an operation will be the exchange of part of Bulgaria's brady bonds with new eurobonds.

The finance ministry expects the deal to result in net nominal reduction of Bulgaria's foreign debt of between $100m (E114m) and $125m, some 8-10 per cent.

The new eurobonds will be with fixed interest rate and will be floated in two issues, one in euro, which will mature in January 2013 and another one in dollars, to be paid in January 2015.

The operation is supposed to add more than $100m to Bulgaria's fiscal reserves. The brady exchange is expected to reduce the net payments by $400m in the next five years, while the expected reduction in the coming nine years would be $670m.

Bulgarian brady bonds have a nominal value of $4.75bn and represent 56.2 per cent of the country's foreign debt.

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