> The domestic money market showed an increase in the deposit lending activity and volumes in October; interest rates slightly decreased.

Transcription

1 OCTOBER 214 No 12 / 214 > The domestic money market showed an increase in the deposit lending activity and volumes in October; interest rates slightly decreased. > Volatile trade euro-dollar in October. > The decline of the main index of the BSE-Sofia SOFIX continued in October. 1

2 DEBT MARKET Benchmark yield curves in Bulgaria and annual yield (%) o/n depo 1w depo 1m depo 3m depo 12m bill3y bond 5y bond 7y bond 1y bond instrument Yields on EUR-denominated govt securities in Bulgaria and on the euro area curve annual yield (%) BG domestic BG global euro area instrument Middle of Sofibid and Sofibor 2

3 Yields on EUR-denominated govt securities in Bulgaria and on the euro area curve annual yield (%) BG domestic BG global euro area instrument SOFIBOR and 3M T-bill issuance, January - October 214 (%) M SOFIBID 3M SOFIBOR 3M T-bill LEONIA BIR 1. MONEY MARKET In October the interbank money market volume was with an Georgy Tsvetkov (+359 2) increase compared to September, which is illustrated by the increased volumes of both deposit and repo-deals. The average daily volume of interbank money market substantially increased. The trade remained focused mainly in the overnight maturity; the interest rate throughout the month changed within a very narrow range. 3

4 6 Interbank Money Market, volumes (BGN mln) May 214 June 214 July 214 August 214 September 214 October 214 deposit deals repo deals The overall volume of the domestic money market increased by 4.86 per cent to BGN million. The deposit lending deals volume went up by per cent to BGN million, while the repo-deals volume increased by per cent, to BGN million. Increased volumes of both deposit and repodeals The monthly volume of the euromoney market term transactions decreased by 1.34 per cent and reached BGN million. The deposit lending deals (in all currencies: EUR, USD and GBP) are with a decrease of 1.53 per cent, to BGN million, entirely due to a decrease in the EUROdenominated deposits (decrease of 45.51%). The repo-deals showed an increase in volumes by 11.1 per cent, to BGN 79.3 million (71.5 million in September). in combination with a slight decrease in the euromoney market volumes Interbank Euromoney Market, volumes (BGN equivalent in mln) EUR EUR EUR USD USD USD Other Other Other August 214 September 214 October 214 August 214 deposit deals September 214 October 214 repo deals August 214 September 214 October 214 4

5 The banking system remains highly liquid. The average daily excess reserves in October increased by per cent and reached BGN million, following BGN million in September (excess reserves are calculated taking into account a calendar month, and not the actual maintenance period from the 4 th working day of each month till the 3 rd working day of the next). There was not a single day in October with negative excess reserves for the system. The liquidity in the banking system remained significant. 2 5 excess reserves Interbank money market and excess reserves, October 214 (BGN mln) money market Liquidity in the banking system is also influenced every month by: (1) monetary flows through government securities - bills and bonds of the Ministry of Finance, which in October resulted in a net inflow to banks of BGN million; and (2) pension transfers, which in October led to an increase in system resources by BGN million. 5

6 Deposit Deals, October 214 (BGN mln) all deposit deals unsecured of which overnight secured 1.1. Interbank market: deposit lending and repotransactions Deposit lending maintained a prevailing share in the interbank money market volume (deposit lending and repodeals); for October this share slightly decreased and reached 57.9 per cent, after 59.7 per cent in September; respectively, repo-deals came up to 42.1 per cent compared to 4.3 per cent in September. Unsecured market In October term unsecured deposit lending between market participants amounted to BGN million and 91.6 per cent of these (BGN million) were overnight deals. This share increased compared to September, when 81.6 per cent (BGN million) of the deals were overnight. 6

7 Maturity breakdown of the unsecured interbank trades 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % ` Oct'13 Dec'13 Feb'14 Apr'14 Jun'14 Aug'14 Oct'14 ON up to 1W above 1W up to 1M above 1M up to 3M above 3M 18 Unsecured Deposit Market, October 214 (BGN mln) overnight other Overnight Market Rates, October Effective overnight rate - unsecured deposit deals SOFIBID ON SOFIBOR ON 7

8 The monthly average interest rate of the overnight unsecured deposit lending in October decreased, reaching the level of.2%. The monthly average of the LEONIA, a reference rate based on the unsecured overnight deposit lending by a panel of banks also decreased and amounted to.2%. Hence the size of the BNB base interest rate for November 214 was set at.2%..1.8 LEONIA EONIA LEONIA / EONIA, October The money market yield curve increased throughout maturities longer than 2 weeks The money market yield curve reflects the average value of SOFIBID and SOFIBOR ON SW 2W 3W 1M 2M 3M 4M 5M 6M 7M 8M 9M 1M 11M 12M Secured market There were no secured deposit lending deals in October, while the repo-deals share was 42.1 per cent of the total interbank money market transactions volume (BGN

9 million); this share increased compared to September, when it amounted to 4.3 per cent (BGN million). BULGARIAN INTERBANK MONEY MONEY MARKET AND EUROMONEY MARKET DEALS BETWEEN BULGARIAN BANKS, OCTOBER 214 (in millions of the respective currencies) MARKETS: interbank money market euromoney market deals between Bulgarian banks TYPES OF DEALS: value in millions of BGN equivalent in millions of EUR value in millions of EUR equivalent in millions of BGN value in millions of USD equivalent in millions of BGN equivalent in millions of EUR equivalent in millions of BGN equivalent in millions of EUR unsecured deposit deals secured deposit deals repo of Bulgarian govt securities* outright purchases of short-term BGN Bulgarian govt securities outright purchases of long-term** BGN Bulgarian govt securities* outright purchases of long-term** forex Bulgarian govt securities* * at market value; for repos - only the security purchase (money lending) leg ** bonds of over 1 year in original maturity Source: BNB, from commercial banks' daily reports deals in BGN deals in EUR deals in USD deals in other currencies 1.2. Outright interbank purchases of securities on the secondary market On the interbank secondary market for government securities, the market value of the outright purchases of all maturities in October reached BGN 19.7 million (decrease of 27.27% compared to BGN million in September). 35 Outright deals in Bulgarian government securities, October 214 (BGN mln) BGN-denominated securities up to 12M forex-denominated securities BGN-denominated securities over 12M On the euromoney market in October the volume of outright purchases of government securities decreased and reached BGN 62.3 million, after BGN million in September. 9

10 2. CAPITAL MARKET The following primary auctions of government securities were Boris Malinchev (+359 2) carried out by the Bulgarian National Bank as an agent of the Ministry of Finance in October: - on 6 October for a batch of an issue BG (5Y government securities) with maturity date 22 January 219, at BGN 55 million and interest rate 2.5%; for participation in the auction were admitted orders at BGN 59 2 ; the Ministry of Finance approved bids for BGN 55 million; - on 2 October for a batch of an issue BG (1Y6M government securities) with maturity date 15 February 224, at BGN 55 million and interest rate 4.%; for participation in the auction were admitted orders at BGN 78 4 ; the Ministry of Finance approved bids for BGN 55 million. In October the Bulgarian Stock Exchange Sofia AD (BSE- Sofia) registered for trading on the bonds segment the following corporate bond issue: - 5Y bonds for EUR 1 million, issued by Web Finance Holding AD - Sofia, interest 8.%, issue date , 6-month interest payment, (stock-exchange code 9M7C). The monthly secondary market stock-exchange turnover of corporate bonds made a serious decrease in October, amounting to BGN 3.4 million (a daily average of BGN.15 million) after BGN 8.5 million in September. The deals concluded out-of-stock exchange were at the amount of BGN 2. million. 1

11 The price of new EUR-denominated global bonds with maturity 224 kept staying at the level of over 1%, and prices of EUR-denominated 217 globals went up to the 17% mark. The USD-denominated 215 globals prices went down to the 11% mark. On the secondary market the prices of the compensation instruments had no significant changes during the month, keeping the level of about BGN.6 during the whole month. The compensation instruments segment turnover decreased by 42%, amounting to BGN.7 million (a daily average of BGN.3 million) compared with the BGN 1.2 million in September. 2 BSE transactions with compensatories, October 214 (date T; BGN thousand) Compens.instruments Segment compens.instruments / OTC privatis.segment (comp) 11

12 ASSET MARKETS NET ASSETS: equity BGBX4 and SOFIX BGBX4 SOFIX (right scale) 9 Real Estate Prices (BGN per sq. m.) 89 GROSS ASSETS: real estate (National Statistical Institute quarterly data) Gold (XAU/BGN) commodities forex FOREX (USD/BGN)

13 EQUITY CAPITAL (NET ASSETS) Boris Malinchev (+359 2) MARKETS municipal bonds corporate bonds UCIT Structural products BSE deals of which: of public companies of nonpublic companie regular deals privatis. segment deals (cash) Priv atis. Segm. (compensativ e)* Initial Public Of f ering Segment* OTC deals (purchases and sales, repo, tender purchases, redemption, registration etc.)** Source: BSE-Sofia daily reports * Not included in the abov e totals ** reported through BSE trading platform Premium Equities Segment DEALING IN SECURITIES REGISTERED ON THE BSE-SOFIA: STOCK-EXCHANGE AND OTC TURNOVER (in millions of BGN) OCTOBER 214 MAIN MARKET ALTERNATIVE MARKET Bonds Segment Exchange Traded Equities Products Segment*** Segment Standard Equities Segment Special Purpose Vehicles Segment Compensati on Instruments Segment *** The Exchange Traded Products Segment was created in May 214; it replaced the f ormer UCIT's Segment and Structured Products Segment Subscription Rights Segment Special Purpose Vehicles Segment Trade in equities not registered on the BSE- Sofia The Bulgarian Stock Exchange Sofia (BSE-Sofia) monthly turnover in October increased by nearly 15%, amounting to BGN 31.7 million (a daily average of BGN 1.4 million) after BGN 27.6 million in September. A more significant turnover during the regular trade was reached by the equities of Speedy AD (BGN 15.3 million) and Sopharma Trading AD BSE transactions with shares, October 214 (date T; BGN mln) Premium Equities Standard Equities SPV privatis.(bgn) AltM/Equities AltM/SPV The turnover in deals concluded off-stock-exchange (reported through the stock-exchange platform) was BGN 33.1 million. A more significant volume was achieved by the deals in equities of Sintetika AD, Zarneni hrani Bulgaria AD, Chimsnab Bulgaria AD and Delta Kredit SIPC. 13

14 OTC transaktions with equity reported on the BSE-Sofa AD October 214. (BGN mln) Premium/OTC Standard/OTC SPV/OTC AltM /Equities/OTC AltM/SPV/OTC The main equity prices index of the Bulgarian stock market SOFIX showed a relatively stable behaviour in October, ending the month with decline of 3,6%. In general the index showed a more clearly expressed downward movement than the leading European economy index (Germany) DAX which finished the month with a.6% decline, while the Rumanian BET ended the month with a 3.4% decrease. DAX, SOFIX and BET, October DAX BET SOFIX (right scale) 14

15 Prices of the bank shares in Bulgaria, eurozone and emerging markets, January - October BANKS BSE BANKS EMU BANKS EM (right scale) BG4 and the equity price indexes of Bulgarian banks, listed on the BSE - Sofia, October BGBX 4 BANK S BSE (right scale)

16 The index of the equity prices of the banks listed on the BSE- Sofia showed stable movement during the month, slower than the upward movement of the eurozone banks and emerging countries banks indices. There were no purchases on the Initial Public Offering segment of the BSE-Sofia in October. 3. FOREIGN EXCHANGE MARKET The dollar rose against the euro in early October, after published data from the US labour market, making it clear Lubomir Tonev (+359 2) Pavlina Babunova (+359 2) that the unemployment rate fell in September to a six-year minimum of 5.9%, and the new jobs in non-agricultural sectors were much more than predicted. There was a rise of the euro influenced by the announced message from the ECB that it starts the purchase of covered bonds in order to overcome the deterioration of the European economy. The euro also held at the higher levels after better than expected results from the stress-tests of banks in the euro area. At the end of the month the dollar rose again against the euro after the Fed announced the end of the so-called programme of "quantitative easing", citing growth in the US economy and the markets were waiting for whether the Fed will announce soon a raise of the interest rates in the United States. The official rate USD-BGN in October passed through two stages. Till mid-october the dollar decreased gradually against the lev and reached a minimum value on of BGN In the second half of the month the lev constantly declined against the greenback, in the last days of the month it approached the levels of more than two years ago, and on 31.1 was recorded a minimum value of the national currency for the month of BGN The monthly average official exchange rate of the dollar against the leva in October increased compared to the previous month by almost.3 lev and reached lev per dollar. 16

17 1.58 Daily BNB reference exchange rate for the USD, October 214 (BGN per USD 1) Daily USD turnover and exchange rates of banks, October 214 SPOT USD mln BGN per USD 1 traded between banks sold to customers average rate for sales to customers bought from customers average rate for purchases from customers average interbank rate EUR SPOT exchange rate, October 214 (BGN per EUR 1) BNB interbank banks from customers banks to customers 17

18 25 Daily EUR turnover of banks, October 214 (EUR mln) SPOT traded between banks bought from customers sold to customers The total turnover of the forex market (gross sum of all purchases and sales by reporting entities) in October increased more than two times, compared to the previous month. On the forex market was exchanged foreign currency against BGN to the amount of EUR million. The average daily turnover in October reached EUR million and also increased compared to the average daily turnover for September, by about EUR million. The increase in turnover was realised in October in the three main segments of the market - trade between banks and BNB, interbank trading (without the participation of the central bank) and the trade between banks with their customers. 18

19 The turnover between the BNB and the banks in October reached EUR million. Compared to the previous month the increase was by EUR 1142,2 million. Тhe central bank was a net seller of foreign currency to the banks with a negative balance of EUR 189,5 million for the month. The BNB was a net buyer of foreign exchange by non-cash transactions with budget organisations with a balance of EUR 38.1 million. In transactions at the counter with citizens and budgetary organisations, the BNB was a net seller of foreign currency for that month, with a negative balance of EUR 6.3 million. 19

20 The interbank spot trading without the participation of the The interbank spot trading without the participation of the BNB in October reached EUR million, the increase compared with the previous month was about EUR 81.1 million. The trade between banks and their customers in October reached EUR million. In comparison with the previous month the increase in turnover was EUR million. The banks sold more foreign currency to their customers than they bought from them, by EUR 25.4 million. 45 Foreign exchange trading of banks with customers - total, October 214 (in mln of EUR) SPOT bought from customers sold to customers net 2

21 2 Foreign exchange trading of banks with nonresidents, October (in mln of EUR) SPOT bought from nonresidents sold to nonresidents net Foreign exchange market October 214 SPOT (in mln of EUR) Purchases Sales Balance Interbank market (commercial banks) (Commercial) banks with customers of which: with nonresidents BNB total BNB with banks of which: *with banks - SPOT *with banks - TOM *with banks - TODAY *with banks - NOTES... BNB transactions with budgetary organisations BNB notes operations at counters Source: BNB, from banks and BNB s daily reports 21

22 Currency structure of forex trading for banks, October 214 1% 95% 9% 85% Others USD EUR 8% 75% interbank (without BNB); 2-banks with customers; Forex swaps and forwards in EUR terms (estimate) FX swap and forward transactions - banks with final customers (in mln of EUR) Purchases Sales Balance October of which: with nonresidents FX structure (percentage) EUR USD Interbank FX swap and forward transactions (in mln of EUR) Purchases Sales Balance October FX structure (percentage) EUR USD The figures for foreign exchange swap deals include both the sales of foreign currecies for BGN and the subsequent purchase operations. Source: BNB, from banks daily reports 22

23 TENDENCIES Short-term expectations: the interbank money market to keep the record low interest rate levels, at the background of slightly decreasing volumes; the SOFIX to continue to move within the range of points; USD/BGN to move within BGN