INTERVIEW: Bulgaria's Alaric to start operations in Romania in 2024

The company, which offers professional and retail trading solutions, has introduced a digital investment platform enabling investors to buy short and mid-term sovereign debt issued by various European countries and intends to expand opportunities for clients to also purchase Romanian Treasury bills, Panayotov told SeeNews on the sidelines of a press conference last Thursday.

Romanian government securities align with some investors' appetite for a relatively higher risk and yield compared to the more frequently-sought sovereign debt issuances of France, Germany, Italy and Spain, which the platform also provides, Panayotov explained.

Alaric will carry out a detailed market assessment and analysis of local players, which will support its informed decisions as to which products are suitable for the Romanian market, the CEO added. The goal is to develop wealth tech products to fully digitise and ensure broad access by retail investors to short-term government bond issuances, not only from major European issuers but also from countries in Southeast Europe (SEE).

Future sovereign debt emissions from Romania, North Macedonia and Serbia, with a 12-24 month maturity, are set to be added to Alaric's platform open as a medium-term investment opportunity to clients at all levels, whether institutional or retail.

"We recognise the Romanian market's potential, both in terms of its size and the behaviour of individual investors. These investors consistently participate in the government bond market and show an inclination towards higher-risk options," Panayotov said.

The company will eventually offer Bulgarian government securities as well, but at present the focus is on securities with greater liquidity, smaller risk when entering and exiting, and at a very low investment threshold of 1 euro ($1.086), Panayotov said.

"The lack of a secondary market, the small number of commercial banks active on the primary market, the discouraging threshold of 100,000 levs per financial investment as well as the cumbersome paperwork requirements are some of the main obstacles slowing the development of a retail market for purchasing Bulgarian government debt", Panayotov explained. He added that as a general rule, Bulgarian and Central European investors are more conservative.

Belgium, Portugal and Italy are the three biggest markets for debt offerings to retail investors, according to figures presented at the press conference. In September, Belgium raised an impressive 21.9 billion euro from a bond sale, spotlighting the recently renewed interest from savers seeking higher-yielding investment opportunities compared to bank deposits.

In Southeast Europe, Romania, Croatia and North Macedonia have also successfully raised funds from bond and T-bill sales to retail investors on local stock exchanges. In November, retail investors in Croatia subscribed and paid for 492 million euro worth of an inaugural T-bill issue, after the government raised 1.85 bln euro from a maiden two-year retail bond sale in March.

According to Panayotov, the investment attractiveness of SEE government debt hinges on the fact that it is euro-denominated, which is preferable compared to USD-denominated bonds in some EMEA markets, since the latter usually offer lower yields after factoring in currency hedging costs.

Alaric is also exploring options for offering new financial instruments on its platform in future, including gold or oil certificates to be traded on the BEAM segment of the Bulgarian Stock Exchange, Panayotov said.

($ = 0.9201 euro)