The US Federal Reserve, the European Central Bank and their counterparts in four other countries slashed interest rates in unison on Wednesday, responding to a worldwide clamor for concerted action to contain the worst financial crisis since the Great Depression, Reuters reported.

The news gave a brisk boost to stock and commodity markets but then euphoria gave way to new gloom.

The Federal Reserve said it was cutting its key federal funds rate by half a percentage point to 1.5 percent and China, the European Central Bank and central banks in Britain, Canada, Sweden and Switzerland followed suit.

China cut its benchmark rate in a separate move.

The Japanese watchdog left the interest rate intact at 0.5% but said it strongly supported the coordinated action, Bloomberg reported.

The central banks trimmed base rates to 3.75% in Europe, 4.5% in the UK, 2.5% in Canada and 4.25% in Sweden.

The Chinese central bank slashed off 27 basis points to 6.93% in what is the second rate cut inside three weeks.

The joint move was initiated by the Fed whose USD 700 billion bank rescue plan US President George Bush rubber-stamped last week failed to reinstil confidence on the rattled markets.

The action comes as more of a surprise from the ECB which pressed for battling sky-rocketing inflation in the first place.

In the meantime, Gordon Brown unveiled plans to take under the government’s wings portions of key British banks and give them a GBP 50 billion lifeline and a credit line of at least GBP 200 billion, the FT said.

The snowballing financial crisis placed economic growth under growing pressure, and loosing the global monetary policy is an adequate step, the banks said in a joint statement quoted by Bloomberg.

The International Monetary Fund issued a grim warning that the global economy is sliding for recession in 2009, and losses from the worst financial crisis for nearly 80 years will widen to USD 1.4 trillion.

(Dnevnik)

The Sofia municipal council will raise its stake in the capital’s heating utility by pumping in up to BGN 55 million to help pay out debt to gas supplier Bulgargaz.

The move will strip the energy ministry of its blocking quota in Toplofikatsia Sofia clashing with mayor Boiko Borisov’s urge for the state to assume its debts and control.

Energy minister Petar Dimitrov greeted the council’s decision saying it comes to the aid of the struggling utility.

Borisov said this was a bad decision made under severe pressure from the media adding that the abrupt U-turn came after the ministry was tight-lipped for two weeks on whether or not it will embrace the council’s previous idea that the government should boost its stake to some 70% and pay down all outstanding debts.

Bulgargaz threatened turning the tap on Toplofikatsia unless it paid down its debts to the company estimated at some BGN 60 million.

(Dnevnik)

Investors on the Bulgarian Stock Exchange had another frantic day after stock indices plummeted on rising fears of the unprecedented global financial disaster.

Panic wiped out over 7.7% of the benchmark SOFIX propelling it to its lowest level in four years as some of the most liquid positions crashed close to face value.

“The stock market collapse is a response to the tumultuous global financial markets,” commented Nikolai Kichukov, broker at investment intermediary Elana Trading.

Analysts said investors raced to frenetic sell-offs gripped by fear from the latest batch of bad news about the US and European banking sectors.

The stocks were further pressured by the drain of foreign cash, withdrawals from mutual funds and forced closing of repo deals.

Brokers are unwilling to forecast whether there are new slumps in store and when the losing streak will finally finish but most of them are optimistic about the capital market’s medium- and long-term performance.

(Dnevnik)

Blue-chip company Industrial Holding Bulgaria said it will auction off on October 9 the idle rights to its capital hike.

The company will offer 17 055 586 rights for which no convertible bonds have been subscribed.

Orders will be accepted from 1315 till 1345 local time and must target all unused rights of the bourse member servicing the capital move.

The holding company’s second convertible bond was aimed at scooping up some BGN 22 million to bolster ship building business and overhaul the Burgas port terminal, on the south Black Sea coast.

The bonds have an annual interest rate fixed at 8% with coupon payments due semi-annually, and mature three years after the issue date but can be swapped for shares in the second year with a conversion ratio of 12.

The bonds are available for subscription by October 24.

The company carried out a bond issue in 2004.

(Dnevnik)

The centrist NDSV party of Bulgaria’s ruling coalition attacked the government for not taking the necessary steps to get its dues from the privatisation of telecom operator BTC.

The claw-back clause in the contract for 65% of the telco signed in June 2004 entitles the government to 10% of the difference if the buyer, Viva Ventures, a vehicle of U.S. equity firm Advent International, sold it on for over EUR 300 million.

In 2006 Icelandic tycoon Thor Bjorgolfsson bought from Advent the option to acquire Viva Ventures wrapping up the deal in 2007 and selling the telco right after to US insurance giant AIG for EUR 1.080 billion.

NDSV argued that BTC has switched owners several times, and the 2006 sale happened before the end of the three-year period in which it was to stay with Viva Ventures,

Deputy prime minister and foreign minister Ivailo Kalfin said last week that Bulgaria is seeking EUR 80 million from Advent.

(Dnevnik)

The fallout from the global financial turmoil sobered up the Bulgarian mutual fund market, which crumbled to 40-50% negative returns dashing expectations for three-digit figures.

High-risk mutual schemes, a buzzword of last October, slipped to an average negative yield of 40% and 55% lower assets in the nine months of 2008, under data of the asset managers association and the companies.

There is no estimate about the damage wreaked by buybacks which triggered 40% of the loss of the market’s top foreign performer, Pioneer Investments.

Investors turned a deaf ear to warnings about panic sell-offs and rushed out of the funds, often at a high cost.

The combined assets of the Bulgarian mutual funds contracted by 45% to BGN 480 million, and 38% to BGN 692 million, foreign schemes included.

(Dnevnik)

The price at which Bulgarian banks trade loans has soared by 39% year-on-year in the 12 months to October, the central bank said.

The LEONIA (LEv OverNight Index Average) Reference Rate was 5.76% on October 7 compared to 4.14 in the same period last year.

The index forms Bulgaria’s base interest rate, which was hiked to a record 5.38% for October.

The rising index mirrors lender’s growing appetite for resource prompting them to exchange BGN 150 million - 280 million since the start of the year, more than they needed in the same period of 2007.

In addition, the Sofia interbank offered rate Sofibor rose to 7.1% for a one-month period and to 7.5% for three-month deposits at noon on October 8.

The liquidity squeeze is intensifying over the crisis of confidence clogging the worldwide markets, financiers say.

Lenders are shifting part of the growing cost of resource to loan borrowers and lending is tightening. Bankers forecast the credit market is set to be cooling off as long as the fate of the global market remains unclear.

Insecurity is driving banks away from large-scale projects as businesses are biding their time and revising projects, bankers say.

(Dnevnik)