Romania’s Ministry of Finance initiated on March 26 procedures for new FX bond issues to tap the foreign markets for the second time this year amid elevated political volatility, which clouds the country’s fiscal stabilization and risks pushing its debt into the junk category. The intended FX bonds are denominated in euros and have maturities of 7 and 14 years.

The announcement comes after Fitch issued a note on the impact of the political uncertainty on the ongoing fiscal consolidation process of Romania, which got off on the wrong foot with a 1.6%-of-GDP deficit in January-February. 

With a negative outlook from all three major rating agencies and one step from the junk region, Romania has to cut its deficit by just over 1% of GDP this year (to 7.5% of GDP) in order to avoid a dramatic scenario. Not particularly challenging in normal times, the mission is complicated by the May presidential elections, and a win from populist candidates would significantly erode investors’ confidence.

Romania’s Finance Ministry initiated on March 26 a pre-stabilization period, not to exceed April 26, with a view to a new bond issuance managed by JP Morgan together with Citi, ING, HSBC, and BofA Securities, according to Ziarul Financiar.

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26 March 2025

Macro

Fitch warns outcome of presidential elections may impede needed fiscal reforms in Romania

Ziarul Financiar indicated interest rates of 5.9%06% for the 7-year tranche. The exact offer price of the bonds is yet to be confirmed. 

The stabilization period is intended to support the market price of the bonds. 

During the stabilization period, which is in line with EU market regulations, the stabilization managers may over-allot securities by up to 5% of the aggregate nominal amount of the issue.

The securities are to be listed on the Luxembourg Stock Exchange.

The Romanian state borrowed EUR 2.8 billion and USD 1.25 billion in early February in the first Eurobond issue of 2025.

Thus, the Ministry of Finance issued USD 1.25 billion 12-year bonds at 7.5% while two other bonds denominated in issues were issued: a 5-year EUR 1.4 billion bond at 5.25% and another 9-year EUR 1.4 billion at 6.25%. 

iulian@romania-insider.com

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