The Treasury wants to widen its investor base, to support the state paper market and promote long-term saving and to achieve this it also plans to issue indexed bonds.
The Ministry gave up such securities in 2005.
“State paper for individuals is included in the securities range of Finance Ministries in all states of the region. Such securities cannot make such a great difference, but they have to exist in Romania as well. There are countries that also have electronic trading platforms for such securities. Including retail investors on the list of potential investors in state paper would aid diversify the investor base, stabilize demand for state paper and reduce dependence on banks in funding the budgetary gap,” commented Ionut Dumitru, president of the Fiscal Council.
The Finance Ministry is also mulling a cut in the nominal individual value of state paper in a bid to secure wide access of small investors to these securities.
This idea materialized in 2013, unlike the objective of introducing state paper for individuals.
State paper is no longer a visible placement for the population after Finance Ministry up such issues in 2005. At present, the paper can be purchased through banks or on the bourse, being a form of investment particularly for individuals with above-average cash amounts.
However, should issues of state paper for individuals be resumed in Romania, the Finance Ministry would compete with banks to attract cash from the population, in a period when lending institutions need to mobilize internal financial resources amid the falling exposures of parent banks. On the other hand, costs related to the management of such securities were another factor making the Finance Ministry reluctant to resume issues.
“There probably are administrative, operating barriers in the way of issues of state paper for individuals,” added Dumitru.
The biggest players on the state paper market are commercial banks. In late 2013, banks held almost 56% of the total volume of state paper issued on the market, followed by non-resident investors with 21%, while pension funds held 8.5%.
State paper yields have followed a downward trend in the past two years, reaching all-time lows for certain maturities.
(English version by Catalina Apostoiu)