Companies seek financing to acquire cheap assets

With recession gripping the Bulgarian economy tight, a new niche is opening on the financial market as companies are seeking bank loans to finance purchases of impaired assets.

Bulgarian non-banking lender Creditex forecast that corporate lending will record an increase this year as companies seek cash to pay for bargain production capacities, warehouses and even companies as a long-term business expansion opportunity.

Krasimir Goumnishki, credit director at Creditex, said the firm has already received inquiries on such financing. One banker from a big local lender, speaking on condition of anonymity, said that the bank\'s corporate customers have also inquired about loans to purchase cheaper assets.

Depressed markets are the best time to strike such deals as viable assets come out on the market at lucrative prices and companies with long-term development on their mind need assets, Goumnishki said.

He estimated that assets were now selling at half price, with office space available for about 1000 euro to 2000 euro before the economy imploded and half that amount at present.

The new trend raised a eyebrows with employers and the Confederation of Employers and Industrialists in Bulgaria (CEIBG), one of the bigger employer associations in the country, said that purchases of impaired assets on a bank loan were unlikely to take place on the local market.

CEIBG executive director Evgenii Ivanov and Vassil Velev, chairman of the Bulgarian Industrial Capital Association (BICA), both said banks were currently extremely cautious, providing no long-term financing and taking no risks, while the cost of loans has rocketed.

Any companies doing such deals at the moment were tapping into the own reserves or sought financing from abroad, Velev said.

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