Erste analysts said the Finance Ministry decided to take advantage of the favorable climate prior to the European Central Bank’s monetary policy meeting.
Romania’s Finance Ministry Tuesday raised EUR750 million in a tap of its 6.5% Eurobond which was initially placed in June 2008. The annual yield was set at 5.15%, below the initial guidance of 5.25%.
Investors from the United Kingdom bought 33% of the bonds, those from Austria and Germany 22%, the rest of Europe 36%, and other regions accounted for 9%. Lead managers took over half of the bonds, banks and natural person investors 23%, insurance companies and pension funds 20%, while other investors acquired 7%.
The bond issue holds two major implications, according to Erste report. After having covered 75% of the necessary financing for this year and considering an expected new euro-denominated bond issue over the next months, the Finance Ministry may reduce the Eurobonds issue in lei on the local market.
Thus, pressure upon yields will be limited and the five-year yields may set at 6.8% in December, the report also read.
A second implication is Romania’s Central Bank tougher capability to support the leu, after foreign currency reserves have increased. The central bank’s foreign currency reserves are at EUR30.9 billion.
Erste also forecasts an exchange rate of RON4.55 against the euro by yearend, mirroring the risks caused by parliamentary elections early December.
Apart from Tuesday’s debt sale, Romania raised this year $2.25 billion in US dollar-denominated bonds and another 39.86 billion lei (EUR8.87 million) from local lenders.