Romania used a window of opportunity other countries in the region have used to launch the 30-year issue.
Tuesday’s dollar-denominated bond issue is a step towards ensuring sustainability of public debt and permanent access to the domestic and international markets, at volumes and yields that reflect the quality of its economic fundamentals, said Cristian Popa, central bank deputy governor.
He believes the premium Romania has to pay for the record maturity of 30 years is worth it and could not be avoided, the same way it could not be avoided when the country resumed borrowing from the US market.
The bond issue comes at the right time of plentiful supply of cash on the US market because the curtailing of Fed’s monetary stimulus is just beginning, said Eugen Sinca, BCR chief analyst.
Analysts expect the monthly debt purchases to dwindle with every Fed session until the fall, so liquidity will gradually decline while yields may rise.
Romania continues to depend on foreign capital to roll over foreign debt and finance its budget deficit. In addition to domestic debt, the country also has to repay its foreign public debt. The Finance Ministry had about EUR1 billion to repay to the International Monetary Fund in 2013 and will have to repay about as much this year.
Romania’s international debt sales overshot the EUR10 billion mark last year, a record high for the Eastern European country that put it on the radar of a broader range of investors and turned it into an interesting client for major investment banks.
The country’s visibility on international markets and foreign investor interest also improved after JP Morgan included its bonds in an index in early March 2013, after Barclays had done the same at the end of 2012.
(English version by Loredana Fratila-Cristescu)