Some 14,000 Romanians have bought RON 520 million (EUR 116.5 million) worth of government bonds in the Finance Ministry’s “Centenary” bond issue dedicated to the population.

The subscriptions value if five times higher than the initial sum the Finance Ministry wanted to draw with this bond offer, of RON 100 million (EUR 22.5 million). People have another three days to buy government bonds.

“The success of the issuance shows the confidence the citizens have in the Romanian state. It will be rewarded,” said the Finance Minister Anca Dragu. She added that the Finance Ministry will accept all subscriptions of government bonds made during the issue period.

The offer started on July 11 and will end on July 29. The bonds for the population have a nominal value of RON 100 (EUR 22.2) and pay a yearly interest rate of 2.15%. The titles are due in 2018 when Romania celebrates 100 years since the Great Union. One person can buy maximum 1,000 titles, with a value of EUR 22,400.

Romania’s Government resumed its bond issues for the population last year, after a decade hiatus. However, last year’s bond issue, which also had a total value of RON 100 million, was only 65% subscribed, although it offered a similar interest rate, of 2.15%.

The difference is that the average interest rates that local banks pay for deposits have dropped by almost 1 percentage point in the last 12 months. The average interest rate on new deposits for 6 to 12 months was 1.58% in May 2016, down from 2.56% in May 2015, according to Romania's National Bank (BNR).

The Government decided to reduce the value of bonds sold to the population from RON 1,000 (EUR 225) to RON 100 (EUR 22.5) to make them more accessible.

Romania issues bonds for retail on stock market for the first time

editor@romania-insider.com