The recent cutting of reserve requirements on foreign currency made by Romanian central bank (BNR) could pave the way for the issuance of euro-denominated bonds on the domestic market in the first quarter, Erste Group report released on Monday shows.
According to Austrian analysts, Romania should borrow from the foreign markets as soon as possible, given the political and fiscal risks, and the changing conditions in the financial markets due to the tightening of monetary policy by the US Federal Reserve (Fed).
Romania intends to attract this year EUR 3 billion by selling Eurobonds, but has not announced plans for the first quarter related to volume, currency or maturity.
“There is no reason to delay (ed. note: an output on foreign markets) because the fiscal situation could deteriorate and the uncertainties could increase in Romania later during the year, as the elections approach,” Erste says.
Last week, BNR decided to cut the minimum reserve requirements ratio on foreign exchange-denominated liabilities of credit institutions to 12 percent from 14 percent starting with January 24–February 23, 2016.
According to Austrian analysts, the measure will release about EUR 450 million in market.
“Most of this extra liquidity could be invested by the banks in a euro-denominated bonds issued by the Ministry of Finance on the domestic market, in February,” Erste pointed out.