The signal to the market is that Romanian or foreign companies operating in the local market can use the stock market as an alternative to borrowing money from banks, if they persuade investors with sound financial results and reward them with attractive yields. The stock market is therefore getting some good news after no private company has managed to raise any cash there in the last three and a half years.
GDF Suez Energy Romania is the largest natural gas distribution company on the local market and released RON250 million worth of bonds denominated in lei, at a 7.4% yearly yield.
The bonds will mature in five years and come with annual payment coupon. The company, controlled by French-Belgian giant Gaz de France, posted RON4 billion revenue and almost RON210 million profit.
Tuesday October 23 was the last day for investors to subscribe to the bond offering that started October 17. It was subscribed in full, sources close to the transaction said. The underwriter of the bond offering, BRD, declined comment on the information, saying that the official results would be made public soon.
The largest local investors say they did subscribe in the offering, though.
“We subscribed to the bond offering so as to get a significant share of it. I expect it to be fully subscribed. I for one expect slight oversubscription even,” said Dragos Neacsu, chairman of Erste Asset Management. The company manages BCR Obligatiuni (BCR Bonds), the largest mutual fund in Romania with more than RON3.5 billion in assets.
Other investors are OTP’s bond fund and the pension fund managed by Eureko.
“The assets of the mutual and pension funds are large enough to absorb this offering. I expect insurers to subscribe, too, therefore I do not think the offer is too high for the local market,” said Dan Popovici, chief investment officer of asset manager OTP Asset Management.
Romanian mutual funds, whose assets stand at RON9.7 billion, have about RON2 billion investments in corporate bonds. Almost every bond in their portfolio was issued by a foreign company because until now there had not been any bond offering on the Bucharest Stock Exchange since 2009. The same goes for mandatory private pension funds, which have about RON400 million of their RON8.7 billion assets invested in corporate bonds, mostly issued by foreign companies.
Erste Asset Management’s Neacsu says that the success of GDF Suez’s bond offering is a good sign for the Romanian government, too, which is getting ready to borrow almost as much as GDF from the market via a five-year issue.
The value of a bond of the GDF Suez issue is RON10,000 and the offering was only open to qualified investors, i.e. mutual funds, pension funds, insurance companies and other institutional investors. GDF Suez Energy Romania’s bonds will be listed on the Bucharest Stock Exchange by November 17, and therefore become available to smaller investors to buy.
(English version by Loredana Fratila-Cristescu)