New Bulgarian bonds with 5% yield. Should you buy?

European bondholders are finding a further alternative in Eastern European countries to guarantee themselves attractive and long-term coupon flows.

Alongside the many Romanian bonds, new Bulgarian government bonds are debuting on September 9.

There are three:

• XS2890436087 – Bulgaria 5% 2037 in USD
• XS2890435600 – Bulgaria 4.25% 2044 in Eur
• XS2890420834 – Bulgaria 3.625% 2032 in Eur.

If the two issues in euros are – based on the debut prices on the Frankfurt Stock Exchange – less interesting than equivalent Btp, the one in dollars deserves more attention, especially from a diversification perspective.

The Bulgaria 5% 2037 in USD card

With a six-monthly coupon, it has these characteristics:

• Rating BBB with a positive outlook
• Cut 2,000 Usd
• Amount 1.5 billion USD
• Initial price indications (Frankfurt Stock Exchange) 99.45 USD
• Gross yield 5.126%

We point out a duration (sensitivity to rates) of 9.4, an interesting value because of possible price growth in the presence of a rate cut by the Fed.

Is it worth buying? An initial assessment

Of course, it is an initial analysis based on the initial indications coming from Frankfurt. The stock has in any case already been listed by some of our domestic platforms. The 5% 2037 bond has displayed some volatility, likely due to its relatively short maturity of just over ten years, positioning it on a still compressed segment of the US yield curve.

An equivalent US government bond ensures a yield of 3.8% and therefore the spread of over 130 bp of Bulgaria is more than appreciable, provided that the level of liquidity is not - with a stabilized market - much lower than that of the US Treasuries and of the direct rival, Romania 5.625% 2037. And we will reserve a specific comparison for our readers in the coming days.

Original article published on Money.it Italy 2024-09-10 11:08:28. Original title: Nuove obbligazioni Bulgaria con cedola 5%. Conviene comprare?