The electronic registration of the subscription requests from the investors interested in Romanian bonds is scheduled to open this morning. The final price will be set by demand.
Financial market sources say Romania’s medium-term notes (MTN) road show that began in London on Monday has been going well, and circumstances are very favorable: Romania’s credit default swap (CDS, the cost of insurance against default risk) fell below 230 basis points yesterday, about 130 points below the September 2010 level.
On the other hand, rating agency Standard & Poor’s yesterday affirmed Romania’s sovereign rating at “BB+”, which is below investment grade; outlook was stable.
Under the circumstances, the five-year bonds could be sold at 5.2%-5.3% a year, according to market estimates, somewhat higher than 5% at Romania’s last international bond sale, in March 2010, when it raised EUR1 billion.
Societe Generale and Erste Group, the banks with the highest exposures to Romanian bonds, are lead managers of the program and of the first issue to be released today.
Analysts expect Romania to be able to raise at least EUR1 billion, as investor interest is high.