Chances are 2014 will match the record high of RON1 billion raised by two banks and a utility company via bonds last year.
Raiffeisen Bank shareholders approved a RON500 million bond issue at the end of March and then Pro Credit shareholders greenlighted a RON110 million bond issue at the beginning of April. Garanti Bank owners, too, approved a RON150 million bond issue, market sources say.
All three issues are leu denominated and will be listed on the Bucharest Stock Exchange, which will make them accessible to small retail investors. Garanti and Raiffeisen are well advanced with preparations so they may start their offerings in May or June, market sources say.
No details have been revealed about the interests the three will pay to bond buyers or about the types of investors they target. Such details will be made public at the start of the offerings.
Judging from the signs in the first four months, the year 2014 stands chances of coming close to the record value of last year, when two banks (Raiffeisen and UniCredit) and national grid company Transelectrica (TEL.RO) raised RON1 billion via bond issues. Six corporate bond issues worth RON1.65 billion are listed on the Bucharest Stock Exchange at the moment, one of which is the RON300 million issue of the European Investment Bank’s, falling due next month.
Corporate bonds are highly sought commodities on the Romanian market. One the one hand, this is because mutual bond funds have reached RON7 billion assets and need new bonds to diversify and on the other hand, other institutional investors (pension funds, insurers, closed-end funds, regional investment funds SIF) are interested in as broad a bond supply as possible to give them a choice to bank deposits.
Last year’s bond issue came with a higher interest than bank deposits. Transelectrica pays 6% per annum for five-year bonds, UniCredit Tiriac Bank pays 6.35% a year for five years and Raiffeisen pays 5.5% p.a. for its three-year bonds. Bank deposit interests stand at about 3.5% p.a.
The European Bank for Reconstruction and Development (EBRD) last year announced it had EUR150 million available to buy bonds issued by Romanian banks. EBRD subscribed about 20% or RON110 million of UniCredit Tiriac Bank’s RON550 million issue.
(English version by Loredana Fratila-Cristescu)