> The domestic money market increased in both activity

and volumes in March; the interest rates remained

unchanged, excluding the average interest rate of the

repo-deals, which slightly increased.

> Volatile trading EUR-USD in March.

> An increase in the SOFIX index in March.

MARCH 2015 No 4 / 2015

2

DEBT MARKET

Middle of Sofibid and Sofibor

3

1. MONEY MARKET

In March the interbank money market volume

was with an increase compared to February,

which is illustrated by the bigger volumes of

deposit and repo-deals. The average daily volume

of the interbank money market substantially

increased.

George Tsvetkov

(+359 2) 9145 1611

4

The trade remained focused mainly in the

overnight maturity; the interest rate throughout

the month changed within a very short range.

Interbank Money Market, volumes (BGN mln)

0

1000

2000

3000

4000

5000

6000

October

2014

November

2014

December

2014

January

2015

February

2015

March 2015

deposit deals repo deals

The overall volume of the domestic money market

increased by 36.33 per cent to BGN 1438.9

million. The deposit lending deals volume went up

by 3.06 per cent to BGN 1041.3 million, while the

repo-deals volume increased almost 9 times (vis-

à-vis the insignificant February turnover), to BGN

397.6 million.

The monthly volume of the euromoney market

term transactions increased by 8.51 per cent and

reached BGN 6278.5 million. The deposit lending

deals (in all currencies: EUR, USD, CHF and GBP)

are with an increase of 8.42 per cent, to BGN

6273.2 million, expressed mainly in an increase in

the U.S. dollar-denominated deals. The repo-deals

registered in March reached BGN 5.3 million.

Increase in volumes of the

deposit and repo-deals…

… in combination with an

increase in the euromoney

market volumes.

5

Interbank Euromoney Market, volumes (BGN equivalent in mln)

0

1000

2000

3000

4000

5000

6000

7000

EUR EUR EUR USD USD USD Other Other Other

January

2015

February

2015

March 2015 January

2015

February

2015

March 2015 January

2015

February

2015

March 2015

deposit deals repo deals

The banking system remains highly liquid. The

average daily excess reserves in March increased

by 5.49 per cent and reached BGN 5365.6 million

following BGN 5086.1 million in February (excess

reserves are calculated taking into account a

calendar month, and not the actual maintenance

period – from the 4th working day of each month

till the 3rd working day of the next). There was not

a single day during the month with “negative”

excess reserves for the system.

Interbank money market and excess reserves,

March 2015 (BGN mln)

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

04.03

05.03

06.03

09.03

10.03

11.03

12.03

13.03

16.03

17.03

18.03

19.03

20.03

21.03

23.03

24.03

25.03

26.03

27.03

30.03

31.03

excess reserves money market

The liquidity in the

banking system

remained significant.

6

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 March resulted in a

net inflow to banks of BGN 22.9 million; and (2)

pension transfers, which in March led to an

increase in system resources by BGN 800.0

million.

Deposit Deals, March 2015 (BGN mln)

0

20

40

60

80

100

120

140

160

04.0

3

05.0

3

06.0

3

09.0

3

10.0

3

11.0

3

12.0

3

13.0

3

16.0

3

17.0

3

18.0

3

19.0

3

20.0

3

21.0

3

23.0

3

24.0

3

25.0

3

26.0

3

27.0

3

30.0

3

31.0

3

all deposit deals unsecured of which overnight secured

1.1. Interbank market: deposit lending and

repo- transactions

Deposit lending deals have a prevailing share in

the interbank money market volume (deposit

lending and repo-deals); for March this share

decreased and reached 72.4 per cent, after 95.7

per cent in February; the repo-deals comprised

27.6 per cent compared to 4.3 per cent in

February.

Unsecured market

In March term unsecured deposit lending between

market participants amounted to BGN 1041.3

million and 99.4 per cent of these (BGN 1035.5

million) were overnight deals. This share

increased compared to February, when 93.1 per

cent (BGN 940.7 million) of the deals were

overnight.

7

Maturity breakdown of the unsecured interbank trades

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar'14 May'14 Jul'14 Sep'14 Nov'14 Jan'15 Mar'15

ON up to 1W above 1W up to 1M above 1M up to 3M above 3M

`

Unsecured Deposit Market, March 2015 (BGN mln)

0

20

40

60

80

100

120

140

160

04.0

3

05.0

3

06.0

3

09.0

3

10.0

3

11.0

3

12.0

3

13.0

3

16.0

3

17.0

3

18.0

3

19.0

3

20.0

3

21.0

3

23.0

3

24.0

3

25.0

3

26.0

3

27.0

3

30.0

3

31.0

3

overnight other

8

Overnight Market Rates, March 2015

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

04.0

3

05.0

3

06.0

3

09.0

3

10.0

3

11.0

3

12.0

3

13.0

3

16.0

3

17.0

3

18.0

3

19.0

3

20.0

3

21.0

3

23.0

3

24.0

3

25.0

3

26.0

3

27.0

3

30.0

3

31.0

3

Effective overnight rate - unsecured deposit deals SOFIBID ON SOFIBOR ON

The monthly average interest rate of the

overnight unsecured deposit lending in February

remained unchanged, at the level of 0.01%.

The monthly average of the LEONIA, a reference

rate based on the unsecured overnight deposit

lending by a panel of banks also remained

unchanged and amounted to 0.01%. Hence the

size of the BNB base interest rate for April 2015

was again set at 0.01%.

LEONIA / EONIA, March 2015

-0.08

-0.06

-0.04

-0.02

0.00

0.02

0.04

0.06

04.0

3

05.0

3

06.0

3

09.0

3

10.0

3

11.0

3

12.0

3

13.0

3

16.0

3

17.0

3

18.0

3

19.0

3

20.0

3

21.0

3

23.0

3

24.0

3

25.0

3

26.0

3

27.0

3

30.0

3

31.0

3

LEONIA EONIA

9

The money market yield curve decreased more

visibly throughout maturities longer than 5

months.

The money market

yield curve

reflects the

average value of

SOFIBID

and SOFIBOR

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

ON

2W 1M 3M 5M 7M 9M 11M

31.03.2015

27.02.2015

Secured market

There were no secured deposit lending deals in

March, while the repo-deals share was 27.6 per

cent of the total interbank money market

transactions volume (BGN 397.6 million); this

share substantially increased compared to

February, when it amounted to 4.3 per cent (BGN

45.1 million).

MARKETS:

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

TYPES OF DEALS:

unsecured deposit deals 1041.3 532.4 156.5 306.1 3293.9 5963.1 3048.9 4.1 2.1

secured deposit deals - - - - - - - - -

repo of Bulgarian govt securities* 397.6 203.3 2.7 5.3 - - - - -

outright purchases of short-term BGN Bulgarian govt securities 48.7 24.9 - - - - - - -

outright purchases of short-term forex Bulgarian govt securities - - 76.9 150.4 - - - - -

outright purchases of long-term** BGN Bulgarian govt securities* 140.4 71.8 - - - - - - -

outright purchases of long-term** forex Bulgarian govt securities* - - 45.3 88.6 - - - - -

* 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

BULGARIAN INTERBANK MONEY MONEY MARKET AND EUROMONEY MARKET DEALS

BETWEEN BULGARIAN BANKS, MARCH 2015 (in millions of the respective currencies)

interbank money market euromoney market deals between Bulgarian banks

deals in BGN deals in EUR deals in USD deals in other currencies

10

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 March

reached BGN 189.1 million (increase of 3.28%

compared to BGN 183.1 million in February).

Outright deals in Bulgarian government securities,

March 2015 (BGN mln)

0

10

20

30

40

50

60

70

04.0

3

05.0

3

06.0

3

09.0

3

10.0

3

11.0

3

12.0

3

13.0

3

16.0

3

17.0

3

18.0

3

19.0

3

20.0

3

21.0

3

23.0

3

24.0

3

25.0

3

26.0

3

27.0

3

30.0

3

31.0

3

BGN-denominated securities up to 12M BGN-denominated securities over 12Mforex-denominated securities

On the euromoney market in March the volume of

outright purchases of government securities

substantially increased by 48.50% and reached

BGN 238.9 million, after BGN 160.9 million in

February.

11

2. CAPITAL MARKET

In March there were no auctions for the

placement government securities, carried out by

the Bulgarian National Bank.

The monthly turnover of corporate bonds listed on

the stock exchange continued its severe decline

during the month, and comprised BGN 0,1 million

(BGN 4,7 thousand daily average), while it was

BGN 2,9 million in February.

On the secondary market the prices of the

compensatory instruments registered slight

changes. The monthly stock-exchange turnover of

compensatory instruments increased and

accumulated to BGN 1,6 million (BGN 0,08 million

daily average) while for February it consisted only

of BGN 0,4 million.

Ivo Grigorov

(+359 2) 9145 1624

12

ASSET MARKETS

GROSS ASSETS:

real estate

(National Statistical

Institute – quarterly

data)

NET ASSETS:

equity

commodities

forex

13

EQUITY CAPITAL (NET ASSETS)

municipal

bonds

corporate

bonds

UCIT Structural

products

of public

companies

of non-

public

companie

sBSE deals 3.8 14.3 3.2 0 0.1 1.5 0 0 0.1 1.9 0.2 0 0

of which:

regular deals 3.8 14.3 3.2 0 0.1 1.5 0 0 0.1 1.9 0.2 - -

priv atis. segment deals (cash) 0 0 - - - - - - 0 0

Priv atis. Segm. (compensativ e)* 0 0 - - - - - - - 0 - 0 0

Initial Public Of f ering Segment* 0 0 - 0 0 - - 0 - 0 - - -

OTC deals (purchases and

sales, repo, tender purchases,

redemption, registration etc.)** 0.7 35.2 3.5 0 0 0 0 0 0 0.1 5.9 - -

Source: BSE-Sof ia daily reports

* Not included in the abov e totals

** reported through BSE trading platf orm

*** The Exchange Traded Products Segment was created in May 2014; it replaced the f ormer UCIT's Segment and Structured Products Segment

Standard

Equities

Segment

Special

Purpose

Vehicles

Segment

Compens

ation

Instrume

nts

Segment

Exchange Traded

Products Segment***

MARKETS

DEALING IN SECURITIES REGISTERED ON THE BSE-SOFIA : STOCK-EXCHANGE AND OTC TURNOVER (in millions of BGN) MARCH 2015

Trade in equities not

registered on the BSE-

Sofia

Equities

Segment

ALTERNATIVE MARKET

Bonds Segment

MAIN MARKET

Premium

Equities

Segment

Subscription

Rights

Segment

Special

Purpose

Vehicles

Segment

The monthly registered turnover of shares on the

stock-exchange market for March continued to

decline, and accumulated to BGN 18.1 million

(daily average of 0,95 million), while in February

it was 25 million. A substantial shares turnover

was registered by Zarneni Hrani Bulgaria AD-

Sofia, Chimimport AD-Sofia, Advance Terrafund

REIT-Sofia and Bulgarian Real Estate Fund REIT-

Sofia.

The value of the off stock-exchange deals

reported using the stock-exchange platform

during March, added up to BGN 35,2 million. Of

which a more substantial amount was registered by

the shares of Chimsnab Bulgaria AD, Bulend

Boris Malinchev (+359 2) 9145 1704

14

Investments REIT, Holding Varna AD and Delta

Credit REIT.

The main equity prices index of the Bulgarian stock

market SOFIX showed in March a stable upward

movement (5.4% increase). For three consecutive

months there was a strong positive movement of the

leading European economy index (Germany) DAX

(growth of 4.9%), whereas the Romanian BET

showed a negative movement (1.0 % increase).

15

16

The index of the equity prices of the banks listed

on the BSE-Sofia showed stable movement during

the month similar in general to the movement of

the Eurozone banks’ and emerging countries

banks’ indices.

There were no issues placed on the Initial Public

Offering segment of the BSE-Sofia in February.

3. FOREIGN EXCHANGE MARKET

The euro fell to a new 12-year low against the

dollar in early March. The main reasons for the

decline of the single currency were ongoing

controversy between Greece and its creditors, as

well as the start of the programme of quantitative

easing by the ECB on 9 March. The rise of the

dollar early in the month was supported by

unexpectedly good data from the labour market,

where job creation in the non-agricultural sector

exceeded forecasts. There was a sharp decline in

the dollar against the euro after the Fed meeting,

from which it became clear that the institution will

not rush to raise interest rates. At the end of the

month the euro retreated against the dollar,

despite the good fundamental news from the

eurozone and Germany as investors went back

their profits in the quarter.

The exchange rate of the US dollar against the

BGN in March continued its upward movement

from the previous months. Changes in the first

ten days were sweeping, with more than 0.01 lev

daily change in the official rate of the dollar

against the lev. maximum value of the dollar in

March of 1.85264 lev was registered on 16.03.

After a few days of stability around the maximum

value, the dollar started to fall, reaching a

minimum value for March,1.78046 lev on 25.03.

The average official exchange rate of the dollar

against the lev for March was 1.81132 lev, nearly

Lubomir Tonev

(+359 2) 9145 1608

Pavlina Babunova (+359 2) 9145 1907

17

0.09 lev higher than the average rate for the

previous month.

18

The total turnover of the forex market (gross sum

of all purchases and sales by reporting entities) in

March was EUR 40 377,1 million. compared to the

previous month, the total turnover increased by

EUR 7 959,2 million. The average daily turnover

for the month was EUR 1 922,7 million and also

increased compared to February.

19

The increase in total turnover is due to the

significant increase compared to the previous

month of trade between the central bank and

banks. Trade between banks and their customers

also grew in March compared to the previous

month, while net interbank (without BNB) trade

turnover decreased compared to February.

The turnover between BNB and the banks in

March reached EUR 17 473,9 million. The

increase compared to the previous month was

EUR 3 533,7 million. Тhe central bank was a net

seller of exchanged currency to the banks with a

negative balance of EUR 542,3 million for the

month. In the transactions with budgetary

organisations in wire transfer BNB was a net

buyer of foreign exchange in March with a balance

of EUR 826.9 million. By the counter transactions

with citizens and budget organisations, the central

bank was a net seller of foreign exchange for the

month with a negative balance of EUR 2.1 million.

20

The interbank spot trading without the

participation of the BNB decreased in March by

comparison with the previous month, and

amounted to EUR 284,0 million.

The trade between banks and their customers in

March increased and reached EUR 3 981,0 million.

The increase compared to February was EUR

488,1 million, and the sales by the banks to their

customers exceeded the purchases from them

with EUR 342,4 million.

21

22

Foreign exchange market March 2015 SPOT (in mln of EUR)

Purchases Sales Balance

Interbank market (commercial banks) 284.0 284.0 0

(Commercial) banks with customers 1819.3 2161.7 -342.4

- of which: with nonresidents 154.2 186.0 -31.8

BNB total 9318.3 9035.9 282.4

BNB with banks 8465.8 9008.1 -542.3

of which: *with banks - SPOT 2267.5 6597.1 -4329.6

*with banks - TOM 18.0 0 18.0

*with banks - TODAY 6180.3 2411.0 3769.3

*with banks - NOTES 0 0 0 BNB transactions with budgetary organisations 852.6 25.7 826.9

BNB notes operations at counters 0.0 2.1 -2.1 Source: BNB, from banks’ and BNB’s daily reports

23

Forex swaps and forwards in EUR terms (estimate)

FX swap and forward transactions - banks with final customers

(in mln of EUR)

Purchases Sales Balance

March 2015 3095.9 3133.0 -37.2

- of which: with nonresidents 3009.5 3009.5 0.0

FX structure (percentage)

EUR 98.2 97.8

USD 1.8 2.2 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

TENDENCES

Short-term expectations:

– the interbank money market to keep its activity and

record low interest rate levels, with a slight increase of

traded volumes.

– USD/BGN to move within BGN 1,82 - 1,85.

– a decline of SOFIX due to the uncertainty in the European

market, movement within the range of 490 – 510 points.