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BEH Bond 2018



Project number:


Business sector:

Power and energy

Notice type:


Environmental category:


Approval date:

20 Jun 2018



PSD disclosed:

03 Aug 2018

Translated version of this PSD: Bulgarian

Project Description

The Bank has invested a total of EUR 100 million in the seven year EUR 550 million senior unsecured bond issuance by Bulgarian Energy Holding EAD (BEH) of 26 June 2018. BEH placed the bonds on the 21 June 2018 (EUR 400 million) and on 24 July 2018 (EUR 150 million). The bonds started trading on the Euronext Dublin on 28 June 2018 and are expected to start trading on the Bulgarian Stock Exchange in August 2018.

The funds will be used to refinance the EUR 500m BEH bond issued by the Company in 2013, which matures in November 2018. The bond will thus support improving the financing structure for BEH, which is the central actor in the Bulgarian energy sector. BEH's long-term stability is fundamental to ensuring the continued progress of Bulgarian energy market reforms.

Project Objectives

The operation will further support the implementation of key power sector reforms and will reinforce BEH's balance sheet going forward. The longer tenor of the new bond will ease cashflow pressures
on the Company and its key subsidiary NEK, in anticipation of a fully liberalised market environment. This transaction will also contribute significantly to the Bulgarian capital market development.

Transition Impact


The investment is consistent with the Bank's Strategy for Bulgaria (BDS/BU/15-1/F) as well as the Bank's Strategy for the Energy Sector (BDS13-291/F) and the Agreement Establishing the Bank.

Resilient - The benefits of the longer tenor, and improved pricing, are expected to be substantially passed on to NEK, ensuring its financial resilience and therefore that of the Bulgarian energy sector.

The bond's long tenor and listing on the national exchange will also have a positive impact on the development of local capital markets. The inclusion in an international benchmark index will mean the bond will be the only currently internationally listed Bulgarian corporate bond of benchmark size.

Well-governed - The EBRD participation in the issuance is expected to further entrench the Bank's role as a key partner for the authorities, strengthening the Bank's impact in the second phase of the EBRD-led 'Energy Sector Regulatory Development Programme'.

Client Information


Bulgarian Energy Holding EAD, a holding company, 100% owned by the Ministry of Energy of Bulgaria, which consolidates some of the largest energy companies in the country in the areas of electricity generation, transmission and trading, gas supply and coal mining, among others. BEH is also the public supplier of both electricity and gas in Bulgaria.

EBRD Finance Summary

EUR 100,000,000.00

Total Project Cost

EUR 550,000,000.00

Environmental and Social Summary

Categorised B (2014 ESP). Due to the nature of and rules for capital market transactions, the Bank has not been in a position to undertake detailed or specific due diligence in accordance with the Bank's Environmental and Social Policy before the bond issuance. Given this, a derogation from the Bank's Environmental and Social Policy, Performance Requirement 1, was requested and granted by the Board.  This is in line with the similar request for a bond issue with the same Client in 2016 (DTM 48556).  There is no GET component associated with this project.

In the case of this Project, limited environmental and social due diligence (ESDD) has been undertaken by ESD pre-issuance, to gain an understanding on how environmental, health and safety (EHS) issues are managed and on the Company's strategy to comply with current and future EU legislation as well as on compliance with the existing Environmental and Social Action Plan (ESAP). Overall, based on previous experience of working with the Client and review of the Company's monitoring reports, BEH has sufficient EHS management systems and the capacity in place to fully implement the Bank's Performance Requirements.

The key long term challenge of the Company will be associated with compliance in 7 years' time with the new BAT conclusions, under Directive 2010/75/EU of the European Parliament and reducing its carbon footprint.  The Company is making efforts to address this and the Bank will monitor its progress. Based on the ESDD, the existing ESAP has been updated and  agreed with BEH. This will ensure BEH's future compliance with the Bank's Environmental and Social Policy and relevant Performance Requirements.  It should be noted that BEH operate a number of assets - including coal fired and nuclear plants - these have been excluded from receiving EBRD's proceeds, similar to the previous bond financing.

The Bank will monitor the implementation of the Project.

Technical Cooperation

Following the substantial completion of the donor-funded TC "Bulgaria-Energy Sector Regulatory Development Programme" which was associated with the existing BEH Bond Issue, the EBRD and the relevant Bulgarian authorities are currently preparing a technical assistance project to assist the Regulator during market liberalisation in line with the latest amendments in the energy legislation (part of which were developed with EBRD support).

Company Contact Information

Bulgarian Energy Holding EAD
+ 359 (0) 2 926 38 00
+ 359 (0) 2 925 04 01
16, Veslets Street, Sofia 1000, Republic of Bulgaria

Business opportunities

For business opportunities or procurement, contact the client company.

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Text of the PIP

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