“True to its strategy, (the Ministry of Finance) has managed to lengthen maturities, which is why gross funding needs for 2015 have dropped to around RON50 billion; around 22-23% thereof could be tapped from abroad, while the balance will be sourced domestically,” says a Erste Group Research report published Thursday.
At the end of September, the local authorities had covered around 82% of their total funding needs for this year, estimated at RON55 billion, largely thanks to three bond issues on the international markets at the beginning of the year.
“They have also helped local yields remain, in general, on a downtrend up until now, as the (Finance Ministry) borrowed less from the local market (the average yield on the primary market fell to 3.7% in the first eight months of 2014, from 4.7% in 2013).”
Erste analysts expect the local banks, investment and pension funds will be the main buyers of government notes in 2015, with an increase in net exposure of around RON6 billion.
So far in 2014, the country sold RON29.7 billion in leu-denominated notes and EUR928.7 million at four euro-denominated auctions on the local market.
The ministry also tapped international markets for $2 billion at a two-part U. S. dollar bond issue in January, and raised EUR1.25 billion in a ten-year Eurobond sale in April.