up in lease rates charged by Bulgarian lessors.
A Reuters report quoting market data said that the domestic cost of
lease financing in Sofia has inched up by 25 to 50 basis points.
Major leasing companies have started the ball rolling with the
increased interest rates in new contracts and others are expected
to follow suit. The rate hike is also reportedly affecting existing
lease agreements.
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The cost of lease financing is based on the EURIBOR rate plus a
fixed uplift. The report noted that leasing companies may
feel further compelled to reset interest rates to deflect
inflationary pressure in light of the decade-high annual consumer
price increase of 14.2 per cent reported for March by the national
statistical office.
According to Teodor Marinov, executive director of NBG-owned
Interlease, the rate action will not lead to a substantial increase
in the interest payment burden for the borrowers. It would add 5 to
20 levs to the monthly instalment of clients leasing a mid-size
automobile.
Clients leasing machinery valued at around 100,000 levs will have
to pay 30 to 40 levs more every month.
‘Everyone is testing the market with baby-steps with average
increases of 0.25 to 0.5 per cent. Some leasing companies are still
holding out on an increase. But there is only one way to go so
everyone will have to adjust the cost parameters on their leasing
products,’ said Plamen Minev, chief executive director of
UniCreditLeasing.
‘The rate level for end-customers is up due to the change in the
credit situation on the international markets and the macroeconomic
environment as a whole. The risk premium for Bulgaria has added
1.35 per cent in a year. Inevitably, that affected the cost of the
resource for the Bulgarian companies as well,’ said Marinov.
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By GlobalDataHe pointed out that leasing rates have come down sharply since
their 2000 level of 16 percent. By 2003 they had dropped to 12
percent and further down to 8per cent at present. In his view, the
rate hike will start to unsettle the borrowers if it nears 4 to 5
per cent.
