Bulgaria fits the Eurobond bill
Bulgaria’s new government is preparing to enter the Eurobond markets to reduce its debt service costs. The country’s strong recovery from the banking collapse and economic setbacks of 1996 and 1997, its recent currency stability and commitment to EU convergence should win it a strong reception among investors. But concerns persist over the credibility of the government’s ambitions to balance the budget, cut taxes and increase spending all at the same time.
If you need to find the senior managers of the investment banks' emerging market debt divisions this autumn, check out the business class seats of flights between London and Sofia.
The bankers have convinced themselves that the time is ideal for Bulgaria to raise money from the Eurobond market and they are marketing to a government that needs little convincing.
The decisive factor has been the election in June of a new government, headed by Simeon Saxe-Coburg, the former King Simeon II. Despite tensions among its coalition partners, it has the popular support to see through structural economic reform, take on corruption and reduce bureaucracy.
If it does so, Bulgaria will be able to build on the solid foundations created since the economy crashed in 1996. The country now has a stable currency and a sound fiscal performance.