Bulgaria's success in floating EUR 950 M worth of five-year bonds last week at a yield of only 4.25% comes close to the price higher-rated Lithuania achieved earlier this year, the finance minister has boasted.

The Lithuanian government raised EUR 400 M on international markets in April 2012 after issuing a euro-denominated bond with 4.21% yield.

"It is important to point out however that Lithuania enjoys a higher credit rating than Bulgaria's," Finance Minister Simeon Djankov commented.

Bulgaria's government and analysts have repeatedly stressed the fact that the sale was oversubscribed, and the yield – lowish, indicating that Bulgaria is under much less pressure in comparison with countries, considered until recently much less risky.

An Italian and Spanish recent issue of similar bonds reached a yield of about and over 5% even though the credit ratings of the two countries are higher than Bulgaria's.

Croatia – whose economy is considered much more developed than Bulgaria's - sold USD 1.5 B of dollar-denominated, five-year bonds to investors in April this year at a yield of 6.37% and price of 99.472. The bond carried a coupon of 6.25%.

A Romanian issue in the middle of last month was undersubscribed, while Serbia's 53-week local currency yield reached 14.25% on July 4.

Bulgaria tapped international markets to raise funds to repay the first tranche of about EUR 835 M (USD 1.07 B) in 11-year eurobonds maturing on January 15, 2013.

The Balkan country sold EUR 950 M worth of five-year government bonds at an interest rate of below 5%, considerably lower than the yield of 7.5%, which was achieved during the country's foray into international capital markets back in 2002.

Analysts have also commented that the timing for the eurobond was right as it seized sudden improvement in market sentiment following the latest European Union summit.

BNP Paribas, HSBC and Raiffeisen were appointed to advise the Bulgarian state as well as manage the sale of the bond.

Bulgaria is rated Baa2 by Moody's Investor Services Inc., and BBB by Standard and Poor's Corp.

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