Romania issued USD 4 billion of FX bonds in two equal tranches with 5-year and 10-year maturities, respectively, capitalising on the robust demand that reached USD 15.5 billion in terms of total orders placed, Ziarul Financiar reported.

Robust demand compressed the spreads above mid-swap by 30 basis points (bp) compared to the indicative levels, ending significantly below the spreads seen in the most recent dollar-denominated FX bonds issued by the country in January 2023. Thus, the spreads were 195bp (5-year) and 235bp (10-year) compared to 280bp and 350bp, respectively, in January 2023.

Romania has total financing needs worth RON 180 billion (EUR 36 billion) this year to finance the public deficit (EUR 17 billion) and roll over the debt maturing during the year (EUR 19 billion). Out of this, it plans to borrow some EUR 13 billion from the foreign markets. 

Although smaller than last year's RON 203 billion, Romania's public financing needs seem to face significant constraints both on the local and foreign markets.

Locally, the banks already reached an exposure of 23%-24% (of their assets) and can not go indefinitely upwards. The foreign investors, who were highly interested last year in capturing the high yields paid by the Treasury, may slightly lose interest as the yields are easing.

Under these rather tense circumstances, a fiscal slippage may complicate the Treasury's public financing mission particularly.

iulian@romania-insider.com

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