Bond Yields in Bulgaria 2026: Fair Value vs Euro Area Peers
Since Bulgaria joined the Euro Area on January 1, 2026, bond yields have moved to the forefront of investor attention. While much of the initial enthusiasm focused on equities—reflected in the SOFIX index rising by roughly 20%—fixed-income markets present a quieter but potentially more attractive opportunity.
In this article, we examine Bulgarian bond yields in the context of the Euro Area and assess whether current pricing reflects the country’s fiscal fundamentals relative to Germany, Croatia, and Greece.
Bond Yields After Euro Adoption: Market Context
Euro Area entry typically improves sovereign funding conditions by reducing currency risk, increasing liquidity, and broadening the investor base. These effects often lead to gradual convergence in government bond yields, particularly for countries with disciplined fiscal profiles.
Bulgaria enters the monetary union with a strong macroeconomic position. Public debt stands at approximately 26% of GDP—the lowest in the European Union—while the projected 2026 budget deficit is close to the Maastricht threshold. These fundamentals provide an important backdrop for evaluating Bulgarian bond yields relative to peers.
For a broader context on Euro Area fixed income, see our overview of
Euro Area sovereign debt.
Comparative Snapshot: 10-Year Government Bond Yields
To assess valuation, we compare 10-year bond yields across four Euro Area sovereigns using data from Investing.com.
| Country | Jan 2026 Yield | Credit Rating | 2026 Budget Deficit | Debt/GDP |
|---|---|---|---|---|
| Germany | 2.87% | AAA | 4.0% | 64% |
| Croatia | 3.33% | A- | 2.9% | 57% |
| Greece | 3.36% | BBB | 0.1% | 148% |
| Bulgaria | 3.70% | BBB+ | 3.0% | 26% |
Germany remains the Euro Area benchmark, and its bond yields reflect both credit quality and deep market liquidity. However, Germany is not a realistic valuation anchor for Bulgaria.
More relevant comparisons are Croatia and Greece, which occupy similar positions in the Euro Area sovereign credit spectrum.
Fiscal Fundamentals and Relative Value
From a credit perspective, Bulgaria sits between Croatia and Greece in terms of ratings but stands out on fiscal strength:
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Bulgaria: BBB+, very low debt, moderate deficit
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Croatia: A-, higher debt, similar deficit
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Greece: BBB, extremely high debt despite fiscal improvement
Despite these fundamentals, Bulgarian bond yields currently trade above both Croatian and Greek levels. This discrepancy suggests that markets have not yet fully priced in the benefits of euro adoption or Bulgaria’s exceptionally low debt burden.
For readers interested in broader fixed-income strategies, see
fixed-income market analysis.
Fair Value of Bulgarian Bond Yields in 2026
With the lowest debt ratio in the entire EU and a deficit close to the Maastricht threshold, Bulgaria’s fiscal position is objectively stronger than that of most Euro Area peers. Entry into the Euro Area also tends to improve market perception and funding conditions. An upgrade is therefore possible over the medium term, but even without one, simple relative-value logic suggests Bulgarian yields should trade between Croatia and Greece.
Since 10-year yields for those two countries are currently around 3.3–3.4%, a fair value estimate for Bulgarian 10-year bonds would be roughly 3.35%.
If Bulgarian 10-year yields converge toward that level during 2026, from around 3.70% today, investors could realize close to 10% cumulative total return over the year (coupon plus price appreciation). This is not equity-like performance, but in an environment of elevated geopolitical and macro uncertainty, it represents a very attractive risk-adjusted opportunity.
For this reason, we regularly allocate to Bulgarian government bonds for clients with portfolios above EUR 100,000. For investors with smaller amounts, starting from as little as EUR 1, we also offer access to 6-year Bulgarian government bonds yielding around 3% through our platform at www.alaric.bg.