“The local politics scene is heavily influenced by the president, who is strongly committed to cooperation with the International Monetary Fund and the European Commission. Unless there is a strong pressure on currency we do not see reasons for yield increases,” said Juraj Kotian, analyst with Erste Bank.
“There have been other reshuffles in the government in the past three years, but there was still continuity,” Kotian told reporters during a chat on Erste’s 2012 CEE Bond Market Outlook report.
Romanian Prime Minister Emil Boc resigned earlier Monday, following weeks of street protests against austerity measures. Boc was replaced by Justice Minister Catalin Predoiu, who will act as interim premier until the president can name a successor.
Asked whether a government made of technocrats would fare better than one formed of politicians, Kotian said the former might have a broader support in the parliament and would help reduce political tensions.
However, the markets are more interested in the continuity of the economic policies following the parliamentary elections in the fall, Kotian said.
The Erste analyst estimates Romania’s Finance Ministry will tap the US debt market again this year, following a successful $1.5 billion bond sale late January.
“The conditions will depend on general market sentiment, but if anything bad happens, for example a global credit event which would shaken government bond markets, such as a Greek default, the financing conditions for Romania should remain good,” Kotian said.
He said Romania’s borrowing costs are favorable and they should remain at this level or even improve in the next international issue, “unless there is a global event.”
Romania sold 10-year bonds worth $1.5 billion on the US market in January, at an annual yield of 6.875%. The auction was heavily oversubscribed as investors offered almost $7 billion, the highest offer to date for US dollar-denominated bonds issued by a country in central and eastern Europe.
On Monday, Romania’s Finance Ministry sold 1.85 billion lei (EUR427 million) in one-year treasury bills, while the average yield fell to 5.9% a year from 6.21% at the previous similar auction.