This matters more than it might appear at first. ‘BBB-‘ is the threshold below which Romanian government bonds would automatically be dropped from the portfolio of many international a pension and investment funds, which are required to hold only investment grade assets. A downgrade from Fitch would have triggered a selloff, would have pushed up the yields investors demand and would have make loans significantly more expensive for the government in a year when the Finance Ministry is relying on funding from abroad. More than half of Romania’s public debt, 53% is foreign currency denominated, which makes the country vulnerable to a depreciation of the leu, as well.
(English version by Loredana Fratila-Cristescu)