Bonds can be used for the direct funding of some investment. They can also be used by banks to raise cash, which they can subsequently distribute to smaller projects, believes Mihai Ionescu, manager of Deutsche Bank office in Romania.
“Funding solutions do not mean only banking loans, but also contributions by stakeholders. Most projects for which funding cannot be found lack enough contribution by stakeholders, under the form of capital. These contributions do not only mean that shareholders should come up with money themselves. There are other sources as well wherefrom they can raise the respective money, such as the local and international capital market,” maintains Ionescu.
In 2013, the market of bourse-listed corporate bonds registered a promising evolution for the coming period.
In the coming years, funding through bonds is likely to gain rising popularity considering bond funds, with assets of billions of lei, complain about insufficient offer.
International financial markets can be a funding solution for long-term investment projects, in the opinion of Deutsche Bank official.
“Markets are open, returns are attractive. We should not be afraid to tap international capital market to raise long-term funding for projects for which funding is hard to get. The state should go on with large company listings. If authorities bring other major companies on the Bourse as well, there will also be interest in international markets”.
The problem the Romanian banking market is now coping with is not related to cash, but with the lack of loan demand, in the opinion of Steven van Groningen, Raiffeisen Bank president.
Romania is facing low consumer confidence and a high level of uncertainty.
“A lot of companies cannot get loans for their projects as they do not hold enough capital. Shareholders are forced to come up with their own money. The banking market holds cash, but we cannot expect it to be used in the lack of bankable projects”.
Misu Negritoiu, ING Bank chairman, also points to the market’s cash surplus. “There’s plenty of cash on the market. The cash surplus in Romania has been puting pressure on interest rates and margins. This is the most competitive period for lending from banks’ perspective and the most favorable one for debtors”.
(English version by Catalina Apostoiu)