The manager says he would be happy if private companies conducted bond issues of at least EUR1 billion per year.
With assets of almost RON4 billion under management, BCR Obligatiuni is the largest mutual fund in Romania and one of the most influential institutional investors on the market of government bonds. The manager of BCR Obligatiuni sits at the same table as the heads of treasury of the largest commercial banks when the Finance Ministry negotiates the interest rates at which it can borrow by issuing government bonds.
“Thanks to the significant size of our fund we exert positive pressure on the capital market, but our pressure does not lead to anything because there are no corporate bond issues on the local market. It is frustrating because the role of a mutual fund is to raise money from those who have it and place it with others who need it,” says Dragos Neacsu, president of Erste Asset Management, with assets of RON3.97 billion under management.
So far BCR Obligatiuni has financed the budget deficit with around RON2 billion through the purchase of government bonds, but financing granted to private companies is twice as low, less than RON1 billion.
The bulk of the amount goes to foreign companies because bond issues are considered an exotic financing instrument for Romanian companies. Local companies prefer bank loans, which are more expensive and more difficult to access at a time when the economy is flat and the banking system is more concerned with restructuring old loans than with granting new financing.
Investors put RON108 million in BCR Obligatiuni in January, this being the best month in three years for the fund. The bulk of the amount went to government bonds, bonds issued by foreign companies and bank deposits.
The latest corporate bond issue on the Romanian market was in October of last year and was the first attempt to finance a company through the Bucharest stock exchange in three and a half years.
Last year energy company GDF Suez Energy Romania conducted a bond issue worth RON250 million (EUR55 million). The offering was oversubscribed and BCR Obligatiuni was among the biggest buyers of GDF bonds, with the fund being close to reaching its maximum exposure limit per one single issuer, of 10% of assets.
“We would be happy to have corporate bond issues worth EUR1 billion every year on the local market. Local investors could absorb such an offer. At EUR1 billion per year we could believe the local market could become attractive enough for foreign investors,” Neacsu also said.
Since October 2012, when the GDF Suez bond issue ended, the manager of Erste AM has had had three or four meetings with brokers within banks who tested the fund manager’s interest for bond buying.
“Banks tested our interest for a bond issue by certain companies. I hope some of these meetings will result in bond issues in the first half of this year,” said the CEO of Erste AM.
On foreign markets companies often get financing through bond issues.
(English version by Daniela Stoican)