1. Why was leasing chosen as a financial intervention in Bulgaria? Wha

QUESTION

1. Why was leasing chosen as a financial intervention in Bulgaria? Whatconstraints to finance existed in themarket? 2. What preconditions needed to be addressed for the leasing company tobe launched? 3. What are the sources of funding for the leasingcompany?

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EQUIPMENT LEASING FOR BULGARIAN AGRICULTURAL BUSINESS
Please read the case study carefully and answer the questions below
Farmers and businessmen in Bulgaria (EU) can lease equipment and pay for it over time instead of raising money up front to buy it, thanks to a public-private partnership of local and international financial companies.
Originally meant to help farmers obtain tractors and other equipment, the first leasing company in Bulgaria has also helped a dentist starting his own practice acquire dental equipment. It also helped a yeast company get packaging equipment to compete against imports. Loans are hard to come by in post-soviet Bulgaria. The lack of credit is a major brake on small and medium-sized companies struggling to take the place of failed, state-owned enterprises.
More than 20 separate leases involving $1 million worth of equipment had been signed as of October, 2008 by the UniCredit Leasing. The revenues generated from leasing equipment should eventually allow the business to run without donor subsidies.
ABC Leasing Company leveraged an additional $3 million in line-of-credit financing from the Credit Suisse Bank, The European Investment Bank (EIB), and the International Finance Corporation (IFC), which is the market-based lending arm of the World Bank.
Since the company buys equipment at a clients request, increased market demand, for tractors in particular, is reshaping the market. The first set of farmers who wanted to lease tractors preferred a Chinese tractor over the Czech model available on the local market.
Constructing the Deal:
Each party to the deal brought more than money to the table:
UniCredit Leasing Local knowledge, nationwide branch network
Credit Suisse (Switzerland) Extensive leasing experience through its leasing arm, to leasing expertise, experience in emerging markets; also provides a line of credit for funding leases
IFC Experience in establishing leasing companies in post-soviet countries

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