SOFIA, Nov 25 (Reuters) - Bulgaria has picked Citi,HSBC and local units of Societe Generale andUnicredit to arrange bridge financing for this year,two sources familiar with the process told Reuters on Tuesday.
Bulgaria's parliament has given initial consent to plans toraise an extra 4.5 billion levs ($2.9 billion) to plug thisyear's budget gap and prop up the banking system after thecollapse of Corporate Commercial Bank.
"Two international and two local banks have been chosen toprovide the bridge financing ... 1.3 billion euros ($1.6billion)," an industry source, who asked for anonymity, toldReuters.
The Balkan country needs to lend its Deposit Insurance Fundsome 2 billion levs to cover guaranteed deposits at Corpbank.Another 1 billion levs will be used to refinance state supportto First Investment Bank (Fibank), the third biggestlender, which was caught up in the panic in June.
Earlier on Tuesday the European Commission approved theextension of state aid to Fibank and agreed it can be extendedfor up to 18 months.
The finance ministry's spokeswoman declined to comment andsaid the lenders' names will be made public only aftergovernment approval.
Some 19 banks have expressed interest in providing thefunds, which Bulgaria will refinance by issuing global bondsnext year.
A second source expected these bond sales in February orMarch next year, depending on market conditions.
Finance Minister Vladislav Goranov told reporters he plansto present his budget and debt plans for 2015 to the governmentby the end of the week. He has already said the 2015 fiscaldeficit will not exceed the EU threshold of 3 percent of GDP.
New borrowing will bring Bulgaria's public debt to 28.4percent of economic output this year, up from 18 percent in2013, but it will remain the European Union's least indebtedstate.(1 US dollar = 0.8050 euro)(1 US dollar = 1.5679 Bulgarian lev) (Reporting by Tsvetelia Tsolova; Editing by Ruth Pitchford)
HSBC Holdings (HSBA)