Interest rates on the household deposits of Bulgarian banks headed south for a second straight month in July, showed figures of the central bank.

Some experts read this as a sign that banks have started to wean themselves off their heavy dependence individuals as a source of funding. Others said it would take a while before a steady trend can emerge.

The effective annual rate has shed 16 basis points to 7.99% for local-currency household deposits and 18 points to 6.34% on the euro-denominated products.

Lev-denominated corporate deposits come with a lower rate of 6.36%. On the flip side, the return companies generate from euro-denominated deposits has inched up to 4.4%.

Despite the drop, household deposit rate still outstrip year-ago levels by 2% in the aftermath of the credit crunch which sapped liquidity and forced banks to wage a drawn-out deposit war that has lasted for more than a year now.

This is the first decrease for two successive months following the one-month fall in February.

Data of the Bulgarian National Bank (BNB) revealed consumer loan interest rates have moved in the same direction, dipping to an average of 14.15% in July.

On the mortgage market, rates on lev-denominated housing loans wobbled down in February and May but have picked up 78 basis points since the start of the year. Euro-denominated mortgages are climbing up steadily.

Over the last 12 months, the base rate has seen a twofold decline to 2.24% from north of 5% a year ago, but has failed to check the rate spike trend.

(Dnevnik)

Investors holding preference shares in Bulgaria’s industrial conglomerate Chimimport are continuing converting them into ordinary shares, adding 83,000 to the first batch of 150,000, showed data by the Central Depository.

As at August 26, 2009, the shareholders’ equity of Bulgaria’s largest holding company was spread into 150,233,616 common stock and 89,412,651 preferred stock, or a new 83,632 common stock at the expense of the same number of preference stock.

With one preference stock convertible into one common stock, investors are cashing in on the positive difference in the prices of the two classes of shares.

On Wednesday, common stocks traded BGN 0.6 higher than the preferred stock, which narrowed to BGN 0.5 on Thursday. The common stock closed at BGN 2.62 apiece and the preferred stock at BGN 2.57 in yesterday’s session.

The bulk of the preferred stock was subscribed for by physical and legal entities linked to majority owner investment firm Chimimport Invest. Local and foreign institutional investors outside the Chimimport group contributed just BGN 25 million to the BGN 199 million raised during the capital hike.

Unlike the ordinary shares, the preferred shares entitle holders to a guaranteed cumulative dividend of 9% of its issue price of BGN 2.22 plus liquidation value. The shares are non-voting but could be converted into common stock anytime within the next seven years at the desire of the holder under specific conditions and with the approval of the issuer. In June 2016 they will be mandatory converted into common stock.

(Dnevnik)

Growing numbers of Bulgarian holidaymakers went abroad in July, the bulk of them opting for neighbouring destinations, the statistical office said.

The National Statistical Institute (NSI) recorded 522,000 foreign travels, up 14.2 from a year ago. And as the economy reeled, trips to some countries such as Greece reached a record-shattering 63%.

At the same time, tour agencies said foreign vacations have started to lose their appeal with Bulgarians, who are increasingly spending their holiday on local resorts.

In July, Bulgarian travellers made 205,000 trips to Greece, including 51,000 tourist trips, in comparison with 126,000 travels, where 31,000 on holiday, for July 2008.

Macedonia has attracted 6,000 Bulgarian holidaygoers, a 30% increase year-on-year. Trips to Turkey rose by 7.5%, with tourist travels topping 14,500.

While tour agents are seeing numbers slide, many Bulgarians travel to Greece by personal cars and book their own accommodation.

The NSI statistics uses data by the Interior Ministry and border checkpoint surveys.

According to Lyubomir Pankovski, president of local travel company Alma Tour, Bulgaria is the only destination to draw stronger interest from Bulgarian holidaymakers, having welcomed 70-80% more tourists compared with 2008. Vacationers were coaxed into local resorts by the juicy offers rolled out by hotels, he explained.

(Dnevnik)

Investors on the Bulgarian Stock Exchange (BSE) agreed that 455 points is the most suitable level for the blue-chip SOFIX index in a wobbly Thursday session that left most indices flat.

SOFIX and Dnevnik 20 of the blue chips ended modestly lower. The broader BG40 was the only one to buck the downtrend.

Eight Dnevnik 20 components finished higher and the rest surrenders to bears.

Volumes were slim at slightly over BGN 1 million. Among the top performers, resort operator Albena and paint and varnish maker Orgachim pulled of some rise in market capitalisation. Players glued themselves to the UTC corporate bond market, where securities of more than BGN 10 million changed hands in two or three issuances.

The lull on the BSE gave a fresh appeal to foreign markets, which posted marginal gains. In London, Frankfurt and Paris, they ticked up 0.2-0.3 as investors digested good banking and tourism news.

The consensus among analysts on the Bulgarian market is that investors’ risk appetite is growing and unless the economy runs into new trouble, the bourse will keep clear of any more concussions.

Even warnings that the second quarter of the year will plunge deeper into the crisis cannot dampen the bullish mood.

“Investors are already factoring in 2010 earnings that will be definitely better,” Tihomir Kaundjiev, financial analyst and investment brokerage Beta Corp, said on an upbeat note.

(Dnevnik)

Bulgaria is facing no threat of having to pay back EUR 637 million in advance payments under the EU’s operational programmes due to the recent rejection of conformity assessments, said European Commission spokesman Dennis Abbott.

The country has complied with both requirements of submitting the assessments within the deadline and filing applications for the interim payments that represent 80% of the programmes’ total cash pot.

However, money will not start flowing before Sofia authorities tackle the issue with the Management and Monitoring Information System and Brussels approved the updated operational programme reports, Abbott said.

The Commissions dismissed claims that Bulgaria might have to return unabsorbed financing in 2010 when the member states review the EU budget. Abbott explained the country will be able to sign agreements on the total EUR 6.9 billion it is entitled to by 2013 but funding that is not negotiated after that date will have to be given back to the EU budget.

Martin Dimitrov, leader of the Union of Democratic Forces (UDF), called on the finance ministry to audit all operational programmes before the Commission’s European Anti-Fraud Office (OLAF) has discovered any fraud. He said the findings should be published and sent to the European Commission. Back in June the ministry said that the government’s EU funding audit agency has been probing into the programmes. More than BGN 4.2 million has been spent on audits on all EU-funded programmes between January 1, 2007 and June 2009.

(Dnevnik)

In a sign that the economic slowdown is going worse, companies are slipping to poorer results even in sectors previously believed to be better equipped to withstand the downturn such as the food industry.

Agria Group Holding, which specialises in grain production and processing and bread production, said its profit has withered by nearly 19% as sales plunged 10%. Current liabilities to banks doubled to BGN 12.66 million.

Zarneni Hrani Bulgaria-Farin, the agri business of industrial conglomerate Chimimport, suffered a threefold decline in profit to BGN 355,000 at the end of June. And while sales slid too, expenses were flat at BGN 6.7 million as costs for materials slipped and costs for external services and remuneration went up.

Doverie United Holding worsened its financial performance by 77% to BGN 908,000. Total revenue came in slightly lower but currency exchange fluctuations have fetched an almost double increase in positive differences.

Doverie Brico -- one of the companies in the group, which owns France’s Mr Bricolage franchise for Bulgaria, Macedonia and Albania -- closed the first half of the year BGN 150,000 in the red, plunging from a BGN 2.22 million profit a year earlier. This is better than expected than the BGN 457,000 first-half guidance, the company said.

(Dnevnik)