Austrian and German institutional investors offered most of the EUR 290 M that Bulgaria raised in private placement Schuldschein loans.Deutsche Bank and Raiffeisen Bank International acted as arrangers of the Schuldschein loan, which is not well known in Bulgaria and is used to raise capital from both private corporations, municipalities and states.The loan agreement envisages three tranches of seven, 10 and 15 years paying fixed-rate interest
rates.The loan agreement was ratified by Bulgaria's parliament last month.Bulgaria and Deutsche Bank had initially agreed on a EUR 360 M Schuldschein loan to help service debt payments and increase fiscal reserves.
The 30-year swap spread, or the cost of exchanging 30-year fixed-rate interest
payments for floating rates, remained negative on Friday.
That is, at least until the variable rate interest (or derivatives) climbs higher than the original fixed-rate interest
. JPM Chase was apparently expert in making certain the initial interest rates were low and friendly.
The fixed-rate interest
of 4.76% may, under certain circumstances, be converted into a floating rate equal to Libor plus 1.30%.
The loan bears a fixed-rate interest
of 4.78% and matures in December 2018.