March brought an unusual level of activity to Bulgaria’s typically calm capital market. Several notable developments—from private bond placements to upcoming bank issuances and pension reform—highlight shifting dynamics and growing investor interest.

Elana AgroCredit: A Quiet, Almost Invisible Placement

Elana AgroCredit completed a private bond IPO through a private placement, which was reportedly oversubscribed. Bulgaria AIF was not able to participate in the issuance. In any case, our allocation would have been limited—likely in the range of EUR 50,000 to 100,000—given that the bond is amortizing and begins returning principal as early as August 2026.

While such exclusions may raise questions, they are not unusual in private placements, especially when demand exceeds supply. There are often strategic or structural considerations behind allocation decisions, which may become clearer over time. For now, the market seems to have absorbed the issuance without any notable reaction.

ITF Group: High Yield, Moderate Risk, Limited Allocation

More directly relevant for investors was outreach from ITF Group, a company operating in the personal lending space through brands such as GetCash, CreditSmile, Klear Lending, and FinBiz Technologies.

ITF Group’s business model focuses on private borrowers, which explains its elevated interest rates—often exceeding 20% annually. This, in turn, supports its ability to offer investors an attractive:

• 11% fixed annual coupon
• 2-year maturity
• Semiannual coupon payments

Despite the appealing yield, Bulgaria AIF has chosen a conservative allocation of €35,000 (35 units of €1,000 nominal each), reflecting a balanced view of risk versus return. The allocation will be reflected in the March portfolio allocation, to be published by 10 April 2026.

It is also worth noting that ITF Group recently secured €5 million in financing from an Armenian bank, signaling confidence in its expansion strategy within Bulgaria.

Central Cooperative Bank: MREL Bond IPO on the Horizon

Another major development came from the Financial Supervision Commission (FSC), which approved the prospectus for a MREL bond issuance by Central Cooperative Bank (CCB).

Key points:

• The bank now has 12 months to execute the IPO
• No specific issuance date has been announced
• Approval does not obligate execution

Interestingly, this comes at a time when:

• Bulgaria is moving toward deeper integration within the eurozone framework
• The Bulgarian National Bank (BNB) is expected to release excess capital requirements

This raises a logical question, why would CCB seek €50 million in funding if capital buffers may soon be relaxed?

The answer likely lies beyond pure financing needs. Bond issuances also serve to strengthen market credibility, reinforce investor confidence, and position the bank strategically within the local capital market

When Is the CCB MREL Bond Issuance Expected in 2026?

Based on historical patterns, bank bond issuances in Bulgaria tend to occur in late summer (August–September). The expected coupon is likely in the range of:

• 6%–7%, aligning with current market expectations

Pension Fund Reform: A Step Toward Efficiency

Beyond capital market transactions, an important structural reform is underway: changes to Bulgaria’s pension fund legislation.

Pension funds play a key role in providing passive long-term investment exposure and allocating capital across global assets, including government bonds and major equities (e.g., S&P 500 companies).

For 2025, pension funds achieved returns of approximately 7%, which is strong given their typically conservative strategies. However, a major issue remains the extraordinary high management fees of 4% annually that lowers the actual return to only 3%. This is significantly higher than Western Europe pension funds.

Lower Fees Ahead—and a Benchmark for Comparison

Recent legislative changes aim to gradually reduce these high management fees, improving long-term outcomes for investors. For comparison, Bulgaria AIF Fund charges 1% annually, yet achieves similar returns (~7%).

This contrast highlights a key inefficiency in the current pension fund structure and underscores the importance of reform.

SOFIX: Down by 200 Points in a Month

SOFIX went down nearly 200 points over the past month, following a record increase at the beginning of 2026, mainly driven by Bulgaria’s adoption of the euro.

However, the hype faded rather quickly, combined with the geopolitical situation in Iran, which put additional pressure on the market. The correction was not surprising, as the index had risen too fast, pointing more to an emotionally driven move rather than a structural improvement in competitiveness.

That said, we remain positive on SOFIX going forward. Bulgarian pension funds are expected to play a key role, as they gradually expand their investment strategies and take on a higher risk component, which should continue to support the local equity market.