> The domestic money market substantially increased in

both activity and volumes in June; the interest rates of

the repo-deals increased, which influenced the average

interest rate of the market.

> Volatile trading euro-dollar in June.

> A decrease in the monthly turnover of the Bulgarian

Stock Exchange and a slight increase in the SOFIX

index in June.

JUNE 2015 No 7 / 2015

DEBT MARKET

Middle of Sofibid and Sofibor

2

1. MONEY MARKET

In June the interbank money market volume was

with an increase compared to May, which is

illustrated by the bigger volumes of the deposit

and repo-deals. The average daily volume of the

interbank money market increased.

Georgy Tsvetkov

(+359 2) 9145 1611

3

The trade remained focused mainly in the

overnight maturity; the interest rate slightly

decreased during the second half of the month.

Interbank Money Market, volumes (BGN mln)

0

1000

2000

January2015

February2015

March 2015 April 2015 May 2015 June 2015

deposit deals repo deals

The domestic money market overall volume

increased by 23.58 per cent to BGN 1850.1

million. The deposit lending deals volume went up

by 8.17 per cent to BGN 1452.2 million, while the

repo-deals volume vastly increased to a level of

BGN 397.9 million (BGN 154.6 million in May).

The monthly volume of the euromoney market

term transactions increased by 1.06 per cent and

reached BGN 6067.0 million. The deposit lending

deals (in all currencies: EUR, USD, CHF, AUD and

GBP) are with an increase of 1.51 per cent, to

BGN 6025.5 million, illustrated mainly by an

increase in the euro and sterling-denominated

deals, as well as by the appearance of deals

denominated in Australian dollars. The repo-deals

registered in June are with a decrease and

reached BGN 41.5 million (after BGN 67.1 million

in May).

Increase in volumes of

deposit deals and a

substantial increase in

volumes of the repo-deals…

… in combination with a

slight increase in the

euromoney market

volumes.

4

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

April 2015 May 2015 June 2015 April 2015 May 2015 June 2015 April 2015 May 2015 June 2015

deposit deals repo deals

The banking system remains highly liquid. The

average daily excess reserves in June decreased

(by 7.22 per cent) and reached BGN 4712.4

million, following BGN 5079.1 million in May

(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, June 2015 (BGN mln)

0

1 000

2 000

3 000

4 000

5 000

6 000

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

excess reserves money market

Liquidity in the banking system is also influenced

every month by: pension transfers, which in June

led to an increase in system resources by BGN

The liquidity in the

banking system

remained significant.

5

789.8 million; monetary flows through

government securities - bills and bonds of the

Ministry of Finance (which in June amounted to

zero).

Deposit Deals, June 2015 (BGN mln)

0

50

100

150

200

250

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

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 June this share

decreased and reached 78.5 per cent, after 89.7

per cent in May; the repo-deals comprised 21.5

per cent compared to 10.3 per cent in May.

Unsecured market

In June term unsecured deposit lending between

market participants amounted to BGN 1452.2

million and 93.1 per cent of these (BGN 1351.4

million) were overnight deals. This share slightly

increased compared to May, when 89.9 per cent

(BGN 1207.5 million) of the deals were overnight.

6

Maturity breakdown of the unsecured interbank trades

0%

20%

40%

60%

80%

100%

Jun'14 Aug'14 Oct'14 Dec'14 Feb'15 Apr'15 Jun'15

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

`

Unsecured Deposit Market, June 2015 (BGN mln)

0

50

100

150

200

250

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

overnight other

Overnight Market Rates, June 2015

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

Effective overnight rate - unsecured deposit deals SOFIBID ON SOFIBOR ON

7

The monthly average interest rate of the

overnight unsecured deposit lending in June

remained unchanged, at the level of 0.02%.

The monthly average of the LEONIA, a reference

rate based on the unsecured overnight deposit

lending by a panel of banks also kept the level

from the previous month, 0.02%. Hence the size

of the BNB base interest rate for July 2015 was

again set at the level of 0.02%.

LEONIA / EONIA, June2015

-0.16

-0.14

-0.12

-0.10

-0.08

-0.06

-0.04

-0.02

0.00

0.02

0.04

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

LEONIA EONIA

The money market yield curve registered

minimum alterations compared to May.

The money market yield curve

reflects theaverage value of

SOFIBIDand SOFIBOR

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

ON2W 1M 3M 5M 7M 9M 11

M

30.06.2015

29.05.2015

8

Secured market

There were no secured deposit lending deals in

June, while the repo-deals share was 21.5 per

cent of the total interbank money market

transactions volume (BGN 397.9 million); this

share has increased compared to May, when it

amounted to 10.3 per cent (BGN 154.6 million).

There is also an increase in the interest rates.

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 1452.2 742.5 145.3 284.1 3208.2 5592.7 2859.5 122.8 62.8

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

repo of Bulgarian govt securities* 397.9 203.4 21.2 41.5 - - - - -

outright purchases of short-term BGN Bulgarian govt securities 95.8 49.0 - - - - - - -

outright purchases of short-term forex Bulgarian govt securities - - 117.2 229.2 - - - - -

outright purchases of long-term** BGN Bulgarian govt securities* 186.2 95.2 - - - - - - -

outright purchases of long-term** forex Bulgarian govt securities* - - 20.6 40.3 - - - - -

* 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, JUNE 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

9

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 June

reached BGN 282.0 million (substantial increase

compared to BGN 75.2 million in May).

Outright deals in Bulgarian government securities, June 2015 (BGN mln)

0

10

20

30

40

50

60

70

80

90

01.06

02.06

03.06

04.06

05.06

08.06

09.06

10.06

11.06

12.06

15.06

16.06

17.06

18.06

19.06

22.06

23.06

24.06

25.06

26.06

29.06

30.06

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

On the euromoney market in June the volume of

outright purchases of government securities

vastly increased and reached BGN 269.4 million,

after BGN 64.6 million in May.

10

2. CAPITAL MARKET

In March there were no auctions for the

placement of government securities, carried out

by the Bulgarian National Bank.

The monthly turnover of corporate bonds listed on

the stock exchange marked a rise at the end of

the month, and the turnover comprised BGN 3,0

million (BGN 0,13 million daily average), while it

was only BGN 0,7 million in May.

On the secondary market the prices of the

compensatory instruments registered slight

changes. The monthly stock-exchange turnover of

compensatory instruments marked an

insignificant increase and equalled approximately

BGN 1,0 million (BGN 0,04 million daily average),

compared to May which was BGN 0,8 million.

Ivo Grigorov

(+359 2) 9145 1624

11

ASSET MARKETS

GROSS ASSETS: Real Estate Index

(Data from the National Statistical Institute)

The NSI discontinues the publication of quarterly data on the size of the average market prices of dwellings (newly built flats excluded) and publishes housing price indices (total, for new dwellings, and for existing dwelings). This chart represents the quarterly total house price index with base value 2010 = 100.

NET ASSETS:

equity

commodities

forex

12

municipal bonds

corporate bonds

UCIT Structural products

of public companies

of non-public

companieBSE deals 2.9 6.3 5.0 0.0 3.0 1.0 0.0 0.0 0.0 7.6 0.5 0.0 0.0

of which:

regular deals 2.9 6.3 5.0 0.0 3.0 1.0 0.0 0.0 0.0 7.6 0.5 - -

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 68.9 0.5 0.0 0.0 0.0 0.0 0.0 0.0 7.3 5.8 - -

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

Compensation

Instruments

Segment

Exchange Traded Products Segment***

MARKETS

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

Trade in equities not registered on the BSE-

SofiaEquities Segment

ALTERNATIVE MARKET Bonds Segment

MAIN MARKETPremium Equities Segment

Subscription Rights

Segment

Special Purpose Vehicles Segment

Standard Equities Segment

Special Purpose Vehicles Segment

EQUITY CAPITAL (NET ASSETS)

The monthly registered turnover of shares on the

stock-exchange market for June decreased and

comprised of BGN 9.3 million (daily average of

0.4 million), while in May it was 27 million, which

is a decline of 66.23%. A substantial shares

turnover was registered CB Central Cooperative

Bank AD-Sofia, Chimimport AD-Sofia, Advance

Terrafund REIT-Sofia and Enemona AD-Kozloduy.

Ivo Grigorov

(+359 2) 9145 1624

13

The value of the off-stock-exchange deals

reported through the stock-exchange platform

during June, marked a substantial increase and

compounded up to BGN 69,6 million, due to

several transactions for large sums in stocks of

Energo-Pro Grid AD-Varna performed on the

second of June at a sum of BGN 20 million.

Other more notable deals were registered with

stocks of Chimsnab Bulgaria AD, Velgraph Asset

Management AD-Sofia, Synthetica AD-Sofia and

Holding Varna AD-Varna.

14

The main equity prices index of the Bulgarian

stock market SOFIX showed in June a minor

increase in value of 0,48%. For the same period

the leading European economy index (Germany)

DAX decreased by 4,11%, and the Romanian BET

showed a decrease of 2,78%.

15

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 еurozone banks’ index.

There were no issues placed on the Initial Public

Offering segment of the BSE-Sofia in June.

3. FOREIGN EXCHANGE MARKET

At the beginning of the month the euro stayed at

low levels against the dollar due to weak risk

appetite in the markets, in view of weak economic

data from the eurozone and deepening of the

problems with the Greek debt (in the country

were imposed measures of capital controls and

Standart & Poor's downgraded the rating of

Greece to CCC-). In late June, the dollar fell to a

one-month low against the euro and fell against

other currencies after the disappointment of

investors from the words of the chairman of the

Fed that US interest rates still would not increase,

since data on the economy were still

unsatisfactory.

Lubomir Tonev

(+359 2) 9145 1608 Pavlina Babunova (+359 2) 9145 1907

16

The sharp depreciation of the dollar against the

BGN, that started from the last days of the

previous month, continued only in the first days of

June. Almost through the entire month the

movement in the official dollar exchange rate

against the BGN was in a narrow range. A

maximum value of BGN 1.78713 was registered

on 01.06, and weakest against the BGN the dollar

was on 18.06, when the rate reached BGN

1.71504. The average official rate for June was

BGN 1.74435, about BGN 0.01 lower than the

average rate for the previous month.

17

18

The total turnover of the forex market (gross sum

of all purchases and sales by reporting entities) in

June increased for a month in a row and reached

EUR 61 273,0 million. Compared to the previous

month the total turnover increased by EUR 7

519.3 million. The average turnover in June was

EUR 2 785,1 million and slightly decreased,

compared to the previous month.

The increase in total turnover compared to the

previous month was mainly due to a greater

number of working days in June compared to

May. It is realised in the three main segments-

the trade between central bank and the banks,

trade between the banks, without the

participation of BNB and the trade between the

banks and their customers.

19

The trade between BNB and the banks in June

reached EUR 27 793.8 million. The increase, in

comparison with the previous month was

EUR 3 445.2 million. The central bank was a net

seller of foreign currency of the banks with a

negative balance of EUR 237.9 million. In trade by

the central bank with budget organizations in

non-cash way, it was a net buyer of foreign

currency in June with a balance of EUR 109.9

million. In transactions with citizens and budget

organisations, at the counter the central bank was

a net seller of foreign currency for the month with

a negative balance of EUR 2.2 million.

20

The interbank spot trading without the

participation of BNB in June increased, by

comparison with the previous month and reached

EUR 502.5 million.

In June the trade between banks and their

customers increased and reached EUR 4 500.3

million. The increase by comparison with previous

month was EUR 554.9 million. The sales of foreign

currency from the banks to their customers

exceeded the purchases by about EUR 337.4

million.

21

22

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

Purchases Sales Balance Interbank market (commercial banks) 502.5 502.5 0 (Commercial) banks with customers 2081.5 2418.8 -337.4 - of which: with nonresidents 203.8 278.6 -74.8 BNB total 13921.8 14052.1 -130.3 BNB with banks 13777.9 14015.9 -237.9 of which:

*with banks - SPOT 1287.0 13005.9 -11718.9 *with banks - TOM 0.0 0 0.0 *with banks - TODAY 12490.9 1010.0 11480.9 *with banks - NOTES 0 0 0 BNB transactions with budget organisations on account 143.9 34.0 109.9 BNB notes operations at counters 0.0 2.2 -2.2

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 June 2015 1073.2 1108.4 -35.3 - of which: with nonresidents 988.5 1008.5 -20.0 FX structure (percentage) EUR 91.4 91.3 Others * 8.6 8.7

* prevail USD

Interbank FX swap and forward transactions

(in mln of EUR)

Purchases Sales Balance June 2015 55.8 55.8 0.0 FX structure (percentage) EUR 91.6 91.6 USD 8.4 8.4

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 rates, on the background

of slight decrease in overall trading volumes;

– USD/BGN to move within BGN 1,80 - 1,75 in

July;

– a slight increase of SOFIX, movement within the

range of 475 – 485 points;

24