site.btaParliament's Budget Committee Approves New EUR 1,500 Mln Foreign Debt

Parliament's Budget Committee Approves
New EUR 1,500 Mln
Foreign Debt


Sofia, December 10 (BTA) - Bulgaria's National Assembly Budget
and Finance Committee Wednesday approved a Loan Agreement
between the Republic of Bulgaria and HSBC Bank, Societe
Generale, CitiBank, N.A. (London Branch) and UniCredit Bulbank
AD, in their capacity as underwriters and authorized lead
managers, and UniCredit Bank AG (London Branch), in its capacity
as agent.

Finance Minister Vladislav Goranov presented the Bill to Ratify
the Loan Agreement to the members of the Committee. He said that
an agreement on the extension of a loan totalling 1,500 million
euro was signed on December 8 after vigorous negotiations with
the four banks. The transaction was arranged by the London-based
Loan Market Association, which Goranov described as a "standard
setter" in the drafting of such agreements.

"The loan is extended for six months at an annual interest rate
of 6-month Euribor plus a mark-up of 0.9 per cent, or at today's
date the interest stands at 1.08 per cent," the Finance
Minister said. He pointed out that when his Ministry explored
the possibility of placing such debt on the internal market, the
tentative yield proposed amounted to 1.83 per cent, or
approximately 50 per cent higher than the yield on the external
markets. Under the agreement, the bridge financing may be
extended by a further six months.

"The purpose of the external financing is to differentiate the
internal debt financing and thus to prevent a draining of
liquidity from the Bulgarian banking sector," Goranov said. He
explained that the proceeds from the loan will be used to
finance the expected larger State budget deficit, to provide
financing to the Bulgarian Deposit Insurance Fund, and to ensure
liquidity support for the banking sector.

The MPs of BSP-Left Bulgaria and Ataka on the Committee declared
themselves against the contracting of a foreign loan and said
that they will not second the bill. PK/LG

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