FT: Corpbank’s Bond Default Dents Bulgaria’s Credibility

International investors are not optimistic they will get their money from Bulgaria’s Corpbank after the troubled lender defaulted on a bond payment last week, the FT has said.

On Wednesday, the Financial Times published an article by Kerin Hope headlined “Unease grows among investors in Bulgaria’s Corpbank”. The author quoted an unnamed hedge fund manager as saying that “Bulgaria’s credibility with international markets has taken a hit” as a result of the bank’s failure to repay the holders of a USD 150 M senior unsecured bond that matured on Friday.

The default has come despite reassurance by the Bulgaria’s central bank BNB and the Finance Ministry that international investors in the bond issued by the country’s fourth-largest lender, will be able to receive their money. According to a Reuters news report, the risk holders of Corpbank’s dollar-denominated bond will pursue legal action against the bank and the Bulgarian state has increased.

According to the FT article, “the Corpbank saga has highlighted the tight relationships between Bulgaria’s powerful business elite and its politicians […].”

The comment echoed the opinion of Bulgaria’s President Rosen Plevneliev carried by the FT earlier this week. In an interview with the newspaper Plevneliev has said that “[Bulgarian] oligarchs are addicted to state money”.