Romania’s Treasury paid an average yield of 9.04% on bonds maturing July 2027, with a residual maturity of five years, which is less than the 9.23% paid on bonds with similar residual maturity on June 22, according to Ziarul Financiar.

On the other hand, this is an improvement after it paid 9.10% for bonds with a residual maturity of over ten years at the end of last week.

Such a high price paid by Treasury puts a heavy burden on the country’s public debt financing in the coming years, even if the public debt accounts for only some 50% of GDP.

The interest paid by Government in January-May accounted for 0.8% of GDP, up from 0.6% last year.

In all these bond issues, the Treasury is raising more than initially announced and probably not because the bank’s offers are particularly good.

The central bank projects headline inflation to drop in the single-digit area by mid-2023, yet governor Mugur Isarescu has implied that the inflationary episode may last more than initially expected. 

(Photo: Sureeporn Teerasatean/ Dreamstime)

iulian@romania-insider.com