News and Articles related to Bulgaria
Current date: 2010-02-09 07:43

Interbank loans grow 39% costlier

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.