Financial news

More than half of graduates in Bulgaria work at positions for high school graduates and 40 percent of the Bulgarians in working age do not work at all. 30,000 to 40,000 employees leave the labor market annually, 41% of students over 15 years are functionally illiterate, 770,000 Bulgarians have no secondary education, 35% of which are aged up to 25. The data were presented by the Bulgarian Industrial Association (BIA) in Plovdiv during the forum "Regional labor market: state and problems, challenges for human capital development" organized by BIA, the World Bank, Open Society Institute, hosted by one of the leading bicycle manufacturers in Eastern Europe - Maxcom OOD. Plovdiv is favored by the IT industry, which employs more than 5,000 professionals. Plovdiv municipality plans for the next four years are to double the number of IT professionals and municipal administration to participate in the reform of vocational education.

The consumer price index in October 2015 compared to September 2015 was 100.2%, i.e. the monthly inflation was 0.2%. The inflation rate since the beginning of the year (October 2015 compared to December 2014) has been -0.3% and the annual inflation in October 2015 compared to October 2014 was -0.6%. The annual average inflation, measured by CPI, in the last 12 months (November 2014 - October 2015) compared to the previous 12 months (November 2013 - October 2014) was -0.2%. In October 2015 compared to the previous month the prices of goods and services in the main consumer groups changed as follows: food and non-alcoholic beverages - a decrease of 0.4%; clothing and footwear - an increase of 6.4%; housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.4%; furnishings, household equipment and routine maintenance of the house - a decrease of 0.2%; health - an increase of 0.3%; transport - a decrease of 1.4%; communications - an increase of 0.1%; education - an increase of 0.4%.

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Companies

The free market of electricity for citizens faces further delay and could be introduced, possibly until 1 May. According to the Energy Ministry, the reason is that the process takes time, and the World Bank recommends a smooth reform to Bulgaria. According to previous plans, delayed for about eight years, household subscribers should have been able to choose their supplier of electricity from 1 January. Subsequently, the deadline was pushed back to early March, then –to April 1. Now it seems there will be a new delay. "Whether it's April 1 or May 1, there will be an interim period to allow adaptation to the household consumers. I believe this is a reasonable decision on the full liberalization", said energy minister Temenuzhka Petkova. She participated in the joint meeting of the Energy Committee and the watchdog KEVR, which adopted the budget for 2016. Petkova noted that it will take time to adapt because "we do not need turmoil in the sector."

The swift procedure for the sale of BTC is on track, with only a slight extension of certain interim deadlines. So, unless there is some dramatic change, next Thursday - November 19, the largest telecom by revenue in Bulgaria will have a new owner. Options have already been reduced to three: Spas Rusev, Mark Schneider or Panos Germanos. In all three cases, the scheme includes a large financial investor supporting the candidate. Thursday, November 12, was the date by which the four candidates with initial offers had to also submit binding ones, including with specific prices. At the end of the working day were three envelopes. One of them is from the Greek Olympia with US hedge fund Third Point. The second envelope is from Mark Schneider - owner of European cable operator UPC, supported financially by the US private equity fund CVC. The third envelope is from the Bulgarian Spas Rusev, known as lobbyist from the time of Simeon Sakskoburggotski.

State-owned Bulgarian Energy Holding  will seek a syndicated loan of at least EUR 500 million, to be followed by a bond issue of the same size as the loan. The decision comes after BEH decided to cancel a procedure seeking a combined EUR 650 million in a bridge loan and a bond issue. Talks with candidates to provide the funding will open immediately and are expected to be completed in two weeks. The proceeds of the loan or the bond would go to cover debt accumulated by one of BEH's units to two U.S.-owned thermal power plants. In September BEH said it is inviting preliminary bids for an investment consultant on a 650 million euro bond issue, or for a bank to provide it with a loan of the same amount. In August, U.S. companies AES and ContourGlobal signed agreements with the National Electricity Company. BEH's subsidiary, on a decrease in the prices at which it buys electricity produced by the two companies' thermal power plants. For its part, NEK pledged to pay back its overdue liabilities to the two plants. NEK owes the two plants around BGN 900 million in total.

Bulgarian consultancy company Neo London Capital will launch an initial public offering (IPO) on the Sofia bourse on November 17 aiming to raise BGN 40 million to finance investments in residential property in Britain. The window for subscribing and purchasing shares from the IPO will be open from November 17 till December 18, the company said in a statement published on its website last week. Neo London Capital will offer investors 400,000 shares with a nominal value and issue price of BGN 100 each, it said in July in an IPO prospectus posted on the website of the IPO manager - local brokerage BenchMark. All of the target projects will be located in London and will be co-funded with loans from UK main banks whilst Neo London Capital intends to provide equity finance ranging between 15 and 30% of the project budgets, it also said. The expected completion term is between two and three years from initiation of a project. Neo london Capital also said its concept is to invest in fully permitted construction or property conversion process and to dispose of the completed residential, office or commercial units, targeting annual returns in excess of 25%.

Pioneer Investments, which operates in Bulgaria and Santander Asset Management (SAM), together with subsidiaries of the private investment companies Warburg Pincus and General Atlantic are merging into one of the largest companies for asset management worldwide. After the preliminary contract signed back in April a bounding agreement has been struck now. Getting of regulatory approvals in markets where the companies operate are imminent. Completion of merger will happen in 2016. After the takeover the new Pioneer Investments will manage total assets assessed at EUR 400 billion. Thus it will rank among the 35th largest managing companies worldwide and in Top 10 in Europe in terms of assets. Last year the two companies had cash flow totaling EUR 25 billion. The united Pioneer Investments will be presented in more than 30 countries.

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Europe

Finland was one of the toughest European critics of Greece during its debt crisis, chastising it for failing to push through reforms to revive its economy. Now the Nordic nation is struggling to overhaul its own finances as it seeks to claw its way out of a three-year-old recession that has prompted its finance minister to label the country the "sick man of Europe". Efforts by new Prime Minister Juha Sipila to cut holidays and wages have been met with huge strikes and protests, while a big healthcare reform exposed ideological divisions in his coalition government that pushed it to the brink of collapse last week. There have even been calls from one of Sipila's veteran lawmakers for a parliamentary debate over whether Finland should leave the euro zone to allow it to devalue its own currency to boost exports - a sign of the frustration gripping the country. In the latest manifestation of the difficulties of cutting spending in euro zone states, Sipila is walking a political tightrope. He must push through major reforms to boost competitiveness and encourage growth, while placating labour unions to avoid further strikes and costly wage deals next year - and carrying his three-party coalition with him. Unemployment and public debt are both climbing in a country hit by high labour costs, the decline of flagship company Nokia's phone business and a recession in Russia, one of its biggest export markets.

America

The United States Senate has passed the Space Act of 2015, which includes a range of legislative changes intended to boost the US space industry. Perhaps the most significant part are measures allowing US citizens to engage in the commercial exploration and exploitation of "space resources", with examples including includes water and minerals. The right to exploit resources covers anything in space that isn't alive - so if a commercial exploration team discovers microbial life, they can't exploit it for profit. For the purposes of this bill a "citizen of the United States” is defined as "(A) an individual who is a citizen of the United States", "(B) an entity organized or existing under the laws of the United States or a State" or "an entity organized or existing under the laws of a foreign country if the controlling interest (as defined by the Secretary of Transportation) is held by an individual or entity described in subclause (A) or (B) of this clause". That means not only individuals but also corporations, including those that are not wholly US owned, qualify as US citizens for the purpose of mineral exploitation in space.

Asia

The Bank of Japan has held off expanding its massive monetary stimulus programme, preferring to keep its powder dry in the hope that the economy can overcome the drag from China’s slowdown without extra support. But the central bank is likely to remain under pressure to expand its asset-buying or quantitative easing programme as slumping energy costs, weak exports and a fragile recovery in household spending kept inflation well short of its 2% target. Consumer prices fell 0.1% in the year to September, a second monthly decline, while household spending slid 1.3 percent from a year earlier, official figures released on Friday said. The BOJ maintained its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($662bn) through aggressive asset purchases. The US dollar fell 0.5% against the yen and the Nikkei share average lost 0.6% before recovering into positive territory despite disappointment that the BOJ had backed away from another increase in liquidity for equity markets. Markets will now focus on the BOJ’s twice-yearly outlook report due to be released later on Friday. They will also scrutinise comments by BOJ governor Haruhiko Kuroda’s for clues on the timing of any future monetary easing when he gives a news conference on Friday afternoon. With the economy skirting recession, the BOJ is likely to cut its economic growth and inflation forecasts for the fiscal year that began in April.

Trayanovi vrata

The passage Trayanovi vrata is located in Sredna Gora Mountain, 15 km from the town of Kostenets near the Trakia Highway. In 5th century BC the army of the Thracian tsar Sitalk passed through it. Then its name was Suki. In the end of 1st century AD the area was part of the Roman province Serdika. The pass was a connection of Rome and the most eastern parts of the Empire. The fortress itself was built in the II century by emperor Trayan, as a symbolic border between the provinces Thrace and Macedonia. This territory became a part of Bulgaria, when in 831-836, knyaz Malamir annexed it. After this period the Bulgarians called the fortress Shtipon. The fortress went in history in 986, when the Roman emperor Vassili II besieged Serdika. Then the army of Samuil helped the town under siege and the Romans withdrew. During the way back on August 17, the forces of Vassili II were defeated in the passage Trayanovi Vrata. With great difficulty the emperor and a couple of men of his entourage succeeded to escape. Current name of the passage – Trayanovi vrata, was used for the first time in connection with the campaign of Vladislav Varnenchik, who passed through it in 1443. Today the fortress is in the National Monuments of Culture list.

On that day:  Evrenozovo Tomb