FEBRUARY 214 No 3 / 214 > The domestic money market showed a decrease in its total volume in February, resulting from a drop in the sit lending operations; interest rates remained stable. > Growth of the single currency against the dollar in February. > In February, the main index of the BSE-Sofia AD, SOFIX, continued to grow getting closer to the 6- points barrier.
DEBT MARKET Benchmark yield curves in the euro area 31.1.214 and 28.2.214 6 annual yield (%) 5 4 3 2 1 31.1.214 28.2.214 o/n 1w 1m 3m 12m bill 3y 5y 7y 1y instrument Benchmark yield curves in Bulgaria 31.1.214 and 28.2.214 6 5 annual yield (%) 4 3 2 1 31.1.214 28.2.214-1 o/n 1w 1m 3m 12m bill 3y 5y 7y 1y instrument Bulgaria and euro area benchmark yield curves 28.2.214 6 5 annual yield (%) 4 3 2 1 Bulgaria euro area -1 o/n 1w 1m 3m 12m bill 3y 5y 7y 1y instrument Middle of Sofibid and Sofibor 2
Yields on EUR-denominated govt securities in Bulgaria and on the euro area curve 28.2.214 7 6 annual yield (%) 5 4 3 2 1-1 3m 12m bill 2y 3y 4y 5y 6y 7y instrum ent 8y 9y 1y 15y BG domestic BG global euro area SOFIBOR and 3M T-bill issuance, January - February 214 (%) 5 4.5 4 3.5 3 2.5 2 1.5 1.5 2.1 7.1 12.1 17.1 22.1 27.1 1.2 3M SOFIBID 3M SOFIBOR 3M T-bill LEONIA BIR 6.2 11.2 16.2 21.2 26.2 1. MONEY MARKET In February the total interbank money market volume decreased, while at the same time the average daily turnover remained unchanged. The trading structure kept the tendency from January - the sit lending operations showed a new decrease, while the repo-deals turnover was higher again. Plamen Petrunov (+359 2) 9145 161 3
Interest rates remained without significant changes, and the trade was traditionally concentrated mainly in the overnight maturity. 6 Interbank Money Market, volumes (BGN mln) 5 4 3 2 1 September 213 October 213 November 213 December 213 January 214 February 214 sit deals repo deals The monthly volume of the domestic money market decreased, showing a drop by 9.2 per cent to BGN 377.1 million. The sit deals volume decreased by 15.7 per cent to BGN 2649.7 million, while the repo-deals increased by 11. per cent to BGN 112.3 million. The monthly volume of the euromoney market term transactions decreased - by 13.8 per cent, and reached BGN 444.8 million. The drop is resulting entirely from a decrease in the sit lending deals in USD by 27.7 per cent to BGN 1217.9 million, as in the sit lending trade in all currencies (EUR, USD and GBP) the turnover decreased by 13.4 per cent to BGN 435.2 million. The repo-deals which are with minimum market share, showed a considerable decrease in volumes by 69.3 per cent, to BGN 9.6 million. A decrease in the domestic money market volume in combination with a substantial decrease in USD-denominated sit lending deals in the euromoney market 3 25 2 15 1 5 Interbank Euromoney Market, volumes (BGN equivalent in mln) EUR EUR EUR USD USD USD Other Other Other December 213 January 214 February 214 December 213 sit deals January 214 February 214 repo deals December 213 January 214 February 214 4
The banking system remained highly liquid. Тhe average daily excess reserves in January decreased and reached BGN 33.8 million, following BGN 375.3 million in January (excess reserves are here calculated taking into account a calendar month, and not the actual maintenance period from the 4 th of each month till the 3 rd of the next). There was not a day in February with negative excess reserves for the system. The liquidity in the banking system remained high 7 excess reserves Interbank money market and excess reserves, February 214 (BGN mln) money market 6 5 4 3 2 1 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 Liquidity in the banking system is also influenced every month by: (1) monetary flows through government securities - bills and s of the Ministry of Finance - which in February resulted in a net inflow to banks of BGN 21.3 million; and (2) pension transfers, which in February led to an increase in resources by BGN 767.5 million. 5
25 Deposit Deals, February 214 (BGN mln) 2 15 1 5 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 all sit deals unsecured of which overnight secured 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 1.1. Interbank market: sit lending and repotransactions Deposit lending maintained a prevailing share in the interbank money market volume (sit lending and repodeals), as for February this share decreased to 7.3 per cent of the interbank transactions, following 75.7 per cent in January. Unsecured market In February term unsecured sit lending between market participants amounted to BGN 2649.7 million and 84.6 per cent of these (BGN 224.4 million) were overnight deals. This share stayed almost unchanged compared to January, when 83.6 per cent (BGN 2628.4 million) of the deals were overnight. 6
Maturity breakdown of the unsecured interbank trades 1% 9% 8% 7% 6% 5% 4% 3% ` 2% 1% % Feb'13 Apr'13 Jun'13 Aug'13 Oct'13 Dec'13 Feb'14 ON up to 1W above 1W up to 1M above 1M up to 3M above 3M 25 Unsecured Deposit Market, February 214 (BGN mln) 2 15 1 5 3.2 4.2 5.2 6.2 7.2 1.2 11.2 overnight 12.2 13.2 14.2 17.2 18.2 19.2 2.2 other 21.2 24.2 25.2 26.2 27.2 28.2.8 Overnight Market Rates, February 214.7.6.5.4.3.2.1. 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 Effective overnight rate - unsecured sit deals SOFIBID ON SOFIBOR ON 7
The monthly average interest rate of the overnight unsecured sit lending in February remained unchanged, compared to January at the level of.4%. The monthly average of the LEONIA, a reference rate based on the unsecured overnight sit lending by a panel of banks also stayed with no changes,.4%. Hence the size of the BNB base interest rate for March 214 was set at.4%..3.25 LEONIA EONIA LEONIA / EONIA, February 214.2.15.1.5. 2.1 3.1 6.1 7.1 8.1 9.1 1.1 13.1 14.1 15.1 16.1 17.1 2.1 21.1 22.1 23.1 24.1 27.1 28.1 31.1 The money market yield curve moved downwards for the maturities higher than 3 months. 2.5 2. 1.5 The money market yield curve reflects the average value of SOFIBID and SOFIBOR 1..5 28.2.214 31.1.214. ON SW 2W 3W 1M 2M 3M 4M 5M 6M 7M 8M 9M 1M 11M 12M Secured market There were no secured sit lending deals in February and the repo-deals share was 29.7 per cent of the total interbank 8
money market transactions volume (BGN 112.3 million). In January their share was 24.3 per cent (BGN 19.6 million). BULGARIAN INTERBANK MONEY MONEY MARKET AND EUROMONEY MARKET DEALS BETWEEN BULGARIAN BANKS, FEBRUARY 214 (in millions of the respective currencies) MARKETS: interbank money market euromoney market deals between Bulgarian banks value in millions of BGN deals in BGN deals in EUR deals in USD deals in other currencies 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 equivalent in equivalent in millions of EUR millions of BGN millions of EUR TYPES OF DEALS: unsecured sit deals 2649.7 1354.8 1217.9 2382. 1134.9 1625.2 83.9 28.2 14.4 secured sit deals - - - - - - - - - repo of Bulgarian govt securities* 112.3 572.8 4.9 9.6 - - - - - outright purchases of short-term BGN Bulgarian govt securities 91.6 46.8 - - - - - - - outright purchases of long-term** BGN Bulgarian govt securities* 188.7 96.5 - - - - - - - outright purchases of long-term** forex Bulgarian govt securities* - - 39.4 77.1 - - - - - * at market value; for repos - only the security purchase (money lending) leg ** s of over 1 year in original maturity Source: BNB, from commercial banks' daily reports 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 January reached BGN 28.3 million (a considerable increase compared to BGN 169. million in January). 5 45 4 35 3 25 2 15 1 5 Outright deals in Bulgarian government securities, February 214 (BGN mln) BGN-denominated securities up to 12M forex-denominated securities 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 BGN-denominated securities over 12M On the Euromarket in February the volume of outright purchases of government securities increased and reached BGN 77. million, after BGN 67.5 million in January. 9
2. CAPITAL MARKET The following primary auctions of government securities were carried out by the Bulgarian National Bank as an agent of the Ministry of Finance in February: Boris Malinchev (+359 2) 9145 174 - on 3 February for a batch of a new issue BG312148 (3M treasury bills) with maturity date 5 May 214, at BGN 4 million. For participation in the auction were admitted orders to the amount of BGN 612.5 million. The Ministry of Finance approved bids for BGN 4 million; - on 1 February for a batch of a new issue BG24114212 (7Y government securities) with maturity date 12 February 221, at EUR 25 million and interest rate 3.%; for participation in the auction were admitted orders at EUR 66 35 ; the Ministry of Finance approved bids for EUR 25 million. In February the Bulgarian Stock Exchange Sofia AD (BSE- Sofia) registered for trading on the s segment the following corporate issue: - 3Y s for EUR 1 55 8, issued by Sofia Komers-Zalojni Kasti AD - Sofia, interest 12.%, issue date 13.12.213, 6-month interest payment, (stock-exchange code 6SOB). The monthly secondary market stock-exchange turnover of corporate s made a multiple increase in February, amounting to BGN 11.6 million (a daily average of BGN.6 million) after BGN 1.7 million in January. More significant turnover reached the corporate issues of Industrial Holding Bulgaria AD (BGN 7.5 million). 1
1 BSE transactions with s, February 214 (date T; BGN mln) 8 6 4 2 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 Bonds Segment 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 Bonds / OTC The prices of EUR-denominated 217 globals kept staying at the 18% level. The USD-denominated 215 globals prices went down to the 16% mark. 26.2 27.2 28.2 On the secondary market the price of the compensation instruments had insignificant changes during the month, starting from the level of BGN.53 per item at the beginning of the month, BGN.5 in mid-month and again BGN.53 at the month s end. The compensation instruments segment made multiple increase, amounting to BGN 4. million (a daily average of BGN.2 million) compared with the BGN.5 million in January. 2 BSE transactions with compensatories, February 214 (date T; BGN thousand) 15 1 5 3.2 5.2 7.2 11.2 13.2 17.2 19.2 21.2 25.2 27.2 Compens.instruments Segment compens.instruments / OTC privatis.segment (comp) 11
ASSET MARKETS NET ASSETS: equity BGBX4 and SOFIX 235 215 195 175 155 135 115 95 75 2.1 7.1 12.1 17.1 22.1 27.1 1.2 6.2 11.2 16.2 21.2 26.2 BG4 SOFIX (right scale) Real Estate Prices (BGN per sq. m.) 16 15 14 13 12 11 1 65 6 55 5 45 4 35 3 25 GROSS ASSETS: real estate 9 8 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.1 2.11 2.12 (National Statistical Institute quarterly data) 28 26 24 22 2 18 Gold (XAU/BGN) commodities 16 14 2.1 7.1 12.1 17.1 22.1 27.1 1.2 6.2 11.2 16.2 21.2 26.2 forex FOREX (USD/BGN) 1.7 1.65 1.6 1.55 1.5 1.45 1.4 1.35 1.3 1.25 1.2 2.1 7.1 12.1 17.1 22.1 27.1 1.2 6.2 11.2 16.2 21.2 26.2 12
EQUITY CAPITAL (NET ASSETS) Boris Malinchev (+359 2) 9145 174 MARKETS Premium Equities Segment DEALING IN SECURITIES REGISTERED ON THE BSE-SOFIA : STOCK-EXCHANGE AND OTC TURNOVER (in millions of BGN) FEBRUARY 214 MAIN MARKET ALTERNATIVE MARKET Bonds Segment UCIT's Segment Equities Segment Standard Equities Segment Special Purpose Vehicles Segment municipal s corporate s Compensatio n Instruments Segment Structured Products Segment Subscription Rights Segment Special Purpose Vehicles Segment Trade in equities not registered on the BSE- Sofia of public of nonpublic companies companies BSE deals 39.7 25. 4.4 11.6 4... 1. 2.5 of which: regular deals 39.7 25. 4.4 11.6 4... 1. 2.5 - - privatis. segment deals (cash) - - - - - - - Privatis. Segm. (compensative)* - - - - - - - -. Initial Public Offering Segment* - - - - - - - OTC deals (purchases and sales, repo, tender purchases, redemption, registration etc.)** 7.2 38.9.7 5.7 Source: BSE-Sofia daily reports * Not included in the above totals ** reported through BSE trading platform The Bulgarian Stock Exchange Sofia (BSE-Sofia) monthly turnover in February decreased more than two times, amounting to BGN 72.6 million (a daily average of BGN 3.6 million) after BGN 176 million in January. More significant turnover reached the trade in shares of Chimimport AD, TB First Investment bank AD and ZAD Bulstrad Viena insurance group-sofia. The turnover in deals concluded off-stock-exchange (reported through the stock-exchange platform) was BGN 52.5 million. More significant volume reached the deals in equities of Chimsnab Bulgaria AD and Sila Holding AD. 3.2 4.2 BSE transactions with shares, February 214 (date T; BGN mln) 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 13 21.2 24.2 25.2 26.2 27.2 28.2 AltM/SPV/OTC AltM/SPV AltM /Equities/OTC AltM/Equities priv atis.(bgn) SPV/OTC SPV Standard/OTC Standard Equities Premium/OTC Premium Equities
The main index of the equity prices of the Bulgarian stock market SOFIX showed a stable upward trend (8.1% growth) in February being again in relatively synchrony with the behaviour of the index of the leading European stock market (Germany) DAX (5.5% growth), while the Rumanian index BET stayed almost unchanged (minimal growth of.2%). 1 9 8 7 6 5 4 2.3 2.4 2.5 2.6 2.7 DAX, SOFIX and BET, February 214 2.1 2.11 2.12 2.13 2.14 2.17 2.18 2.19 2.2 2.21 2.24 2.25 2.26 2.27 2.28 DAX BET SOFIX (right scale) BGTR3, BGREIT и CGIX 214 г. 7 65 6 55 5 45 4 35 3 5 45 4 35 3 25 2 15 1 5 2.1 6.1 8.1 1.1 14.1 16.1 2.1 22.1 24.1 28.1 3.1 3.2 5.2 7.2 11.2 13.2 17.2 19.2 21.2 25.2 14 27.2 BG REIT CGIX BGTR 3
Pension fund price indices, February 214 (1 July 24 BGN 1) 1.5 1.48 1.46 1.44 1.42 1.4 1.38 1.36 1.34 1.32 1.3 2.2 5.2 8.2 11.2 14.2 17.2 2.2 23.2 26.2 VOLIDEX PROFIDEX UNIDEX 12 11 1 9 8 7 6 5 4 3 2 Prices of the bank shares in Bulgaria, eurozone and emerging markets, January - February 214 1.2 1.7 1.1 1.15 1.2 1.23 1.28 1.31 2.5 2.1 2.13 2.18 2.21 2.26 525 475 425 375 325 275 225 175 125 BANKS BSE BANKS EMU BANKS EM 14. BG4 and the equity price index s of Bulgarian banks, listed on the BSE - Sofia, February 214 14 13 12. 12 11 BGBX4 1. 1 9 BANKS BSE (right scale) 8. 3.2 6.2 11.2 14.2 19.2 24.2 27.2 8 15
The index of the equity prices of the banks listed on the BSE- Sofia showed certain fluctuations during the month, but in general followed the trend of the eurozone banks and emerging countries banks indices. There were no placements of shares or s on the IPO segment of the BSE-Sofia in February. 3. FOREIGN EXCHANGE MARKET In early February, there was some decline of the euro against the dollar due to the extended speculation about a reduction Lubomir Tonev (+359 2) 9145 168 Pavlina Babunova (+359 2) 9145 197 of european interest rate after published data on decline in inflation in the euro area. Subsequently, the single currency managed to rise against the dollar after the ECB's decision to leave unchanged its key interest rate after worse-thanexpected data from the U.S., according to which the economy had created less than the projected jobs. Despite the statements of the new Fed chairman that there would not be significant deviations from the policy of the central bank to reduce the incentives for the economy, the dollar continued to fall after weak data showing decline in industrial production in the previous month. The euro reached a maximum for 214 on the last day of February, supported by the good news from the eurozone, where Germany's GDP in the last quarter of 213 rose and the inflation in the euro area remained at a level of.8%. In February in general there was a trend of reduction in the official rate of the dollar against the lev. In the first half of the month was recorded the highest value of the U.S. dollar against the lev, of BGN 1.4493 on 6.2. Then gradually, with some fluctuations, the rate decreased and reached a lowest value of BGN 1.41593 on the last day of February. The average official exchange rate of the dollar against the lev in February was BGN 1.4321, by less than BGN.1 lower than the average rate for the previous month. 16
1.46 Daily BNB reference exchange rate for the USD, February 214 (BGN per USD 1) 1.45 1.44 1.43 1.42 1.41 1.4 1.39 6 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 Daily USD turnover and exchange rates of banks, February 214 SPOT 2.2 21.2 24.2 25.2 26.2 27.2 28.2 1.5 1.48 5 1.46 USD mln 4 3 2 1 3.2 4.2 traded between banks sold to customers average rate for sales to customers 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 The total turnover of the forex market (gross sum of all purchases and sales by reporting entities) in February was EUR 34 187.2 million. Compared with the previous month, the total turnover decreased by about EUR 7 26.1 million. 21.2 24.2 25.2 26.2 27.2 28.2 1.44 1.42 1.4 1.38 1.36 1.34 1.32 1.3 bought from customers average rate for purchases from customers average interbank rate BGN per USD 1 17
The average daily turnover for February was EUR 1 79.4 million and also decreased compared to the previous month. The decrease in the total turnover was realised in the three segments of the market: trade between banks and the BNB, the trade between banks and their customers and interbank trading (without the involvement of the central bank). The trade between the BNB and the banks in February reached EUR 15 41.7 million. Compared to the previous month the turnover decreased by EUR 3 452. million. The central bank was a net seller of foreign exchange to the banks with a negative balance of EUR 43.6 million. Almost of the same size, but as a surplus of EUR 412.3 million, the BNB was a net buyer of foreign exchange by budget organisations trading with the central bank by wire transfer. In on the counter transactions with citizens and budgetary organisations, the BNB was a net seller of foreign exchange for the month. Foreign exchange trading between banks, February 213 to February 214 (in mln of EUR) SPOT February-14 January-14 December-13 November-13 October-13 September-13 August-13 July-13 June-13 May-13 April-13 March-13 February-13 89.3 14.3 167.9 27.3 153.1 159.1 163.8 189.6 133.5 139.7 29.1 199.9 253.1 18
Monthly EUR trading between BNB and banks, February 213 to February 214(EUR mln)spot February-14 January-14 December-13 November-13 October-13 September-13 August-13 July-13 June-13 May-13 April-13 March-13 February-13-44 -7723 7319-23 -9348 9145-4 -8952 8552-9874 -6 9814-249 -1666 1417-119 -3 116-1445 -82 1363-98 -15 965-9273 35 938-9399 -436 8963-1786 377 11163-173 -149 1317-11325 -288 1137 bought from banks sold to banks net. 1.99984 EUR exchange rate, February 214 (BGN per EUR 1) 1.95583 1.91182 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 BNB interbank banks from customers banks to customers 19 27.2 28.2
16 Daily EUR turnover of banks, February 214 (EUR mln) SPOT 14 12 1 8 6 4 2 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 traded between banks bought from customers sold to customers The interbank spot trading without the participation of the BNB in February increased significantly compared to the previous month and reached EUR 14.3 million. The trade between banks and their customers decreased in February, by EUR 437.9 million, compared to January, and reached EUR 3 369.3 million. The banks sold more foreign currency to its customers than they bought from them, and a negative balance of EUR 243.4 million was reached. 45 Foreign exchange trading of banks with customers - total, February 214 (in mln of EUR) SPOT 35 25 15 5-5 -15-25 -35-45 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 bought from customers sold to customers net 2
2 Foreign exchange trading of banks with nonresidents, February (in mln of EUR) SPOT 15 1 5-5 -1-15 -2 3.2 4.2 5.2 6.2 7.2 1.2 11.2 12.2 13.2 14.2 17.2 18.2 19.2 2.2 21.2 24.2 25.2 26.2 27.2 28.2 bought from nonresidents sold to nonresidents net The financial institutions registered in the central bank under Art. 3, Para 2 of the Law on Credit Institutions and reporting daily to the BNB foreign currency trading against levs in the country decreased their turnover in February, compared to the previous month. They bought foreign currency at EUR 72.2 million and sold foreign currency equal to EUR 76. million. Foreign exchange market February 214 SPOT (in mln of EUR) Purchases Sales Balance Interbank market (commercial banks) 14.3 14.3. (Commercial) banks with customers 1563. 186.3-243.4 - of which: with nonresidents 116.4 152.8-36.4 BNB total 7751.9 7743.7 8.2 BNB with banks 7319. 7722.7-43.6 of which: *with banks - SPOT 551. 2192.7 3317.4 *with banks - TOM 614.. 614. *with banks - TODAY 1195. 553. -4335. *with banks - NOTES... BNB transactions with budgetary organisations 432.8 2.5 412.3 BNB notes operations at counters..6 -.6 Source: BNB, from banks and BNB s daily reports 21
Currency structure of forex trading for some participants, February 214 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 1 2 3 1-interbank (without BNB); 2-banks with customers; 3-forex trading of financial institutions Others USD EUR Forex swaps and forwards in EUR terms (estimate) FX swap and forward transactions - banks with final customers (in mln of EUR) Purchases Sales Balance February 214 4432.3 4462.3-3. - of which: with nonresidents 4261.6 4286.7-25.1 FX structure (percentage) EUR 97.8 97.9 USD 2.2 2.1 Interbank FX swap and forward transactions banks (in mln of EUR) Purchases Sales Balance February 214 61. 61.. FX structure (percentage) USD 1. 1. 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 TENDENCIES Short-term expectations: the interbank money market to keep the record low interest rate levels, at the background of relative upholding of the volumes; the SOFIX to move within the range of 59 61 points; USD/BGN to move within BGN 1,4-1,44. 22