Romania sold EUR 2.8 billion in two FX bonds denominated in euros, with maturities of five and nine years, and USD 1.25 billion (EUR 1.21 billion) of 12-year US dollar-denominated bonds, according to Economedia.ro.

The timing of the issue is complicated both domestically and internationally, but the government announced an ambitious 2025 budget plan in an attempt to assure investors that the public finances came under control after the political turmoil at the end of last year. 

Fitch in December and S&P in January changed the outlook of Romania’s fragile, near-junk, rating to negative from stable. Political volatility remains high, and the budget planning may be overly optimistic. The Fiscal Council already confirmed analysts’ sentiment and estimated the expected slippage (in the absence of supplementary measures) at 0.7% of GDP (to a final public gap of 7.7% of GDP – still an improvement of almost 1% of GDP compared to 2024).

The combined order book for the two euro-denominated issues has reportedly exceeded EUR 4.4 billion.

The guidance spreads were, as expected, higher than those seen in the latest issues last September: 310-330 basis points (bp) above mid-swap for 5-year maturity and 405-420 bp for the 9-year maturity, when it comes to the euro-denominated bonds. In September, Romania paid 275 bp over midswap for 7-year bonds.

When it comes to the dollar-denominated bonds, the guidance spread was 310-325 for a 12-year maturity, compared to 210 bp paid in September.

The issue accounts for roughly a third of the EUR 13 billion FX bonds target for this year (EUR 18 billion in 2024), when the government expects to bring down the public deficit to 7% of GDP from 8.65% in 2024 (EUR 30 billion from EUR 27 billion in 2024). The gross financing needs remain, however, high, at RON 231 billion (EUR 46 billion), out of which the largest part will be financed from the local market.

iulian@romania-insider.com

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