Klaus Iohannis’s presidential election victory over current prime minister and leader of the Social Democratic Party, Victor Ponta, has no immediate effect on Romania’s sovereign credit ratings of BBB-/Stable/A-3, according to Standard & Poor’s (S&P) rating agency.
“That said, the election outcome could result in a period of protracted political wrangling–potentially arising from a weakening of the current coalition following Mr. Ponta’s defeat, or a rift between the president and government,” S&P said in a statement. The rating agency also said it could reassess Romania’s ratings if, as a consequence of the likely uncertainty, it sees the country’s growth prospects deteriorating or if it detects a risk of material deviation from its expectation of stable fiscal balances. This commentary and its subject matter should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook, S&P added.
Romania’s borrowing costs have fallen and its stock market edged higher after centre-right mayor Klaus Iohannis unexpectedly won this weekend’s presidential elections. The stock market cautiously welcomed Iohannis’ victory, climbing 0.3 percent Monday, while the yield of the recently-issued EUR 1.5 billion 10-year bond fell 8 basis points to 2.72 percent.
“Local bond yields were little changed, with the 10-year benchmark at 3.69 percent. Like Indonesia (Widodo’s Surakarta/Jakarta) or India (Modi’s Gujarat), Iohannis has via his success at the local level, won broad support from the country to bring that success to the country at large. In the first round of the vote, his support was concentrated in the areas where Austria-Hungary used to rule until 1918. In the second round, he has clearly won support from others too,” Charles Robertson, chief economist at Renaissance Capital said, according to ft.com.
Opposition leader Klaus Iohannis, 55, won an unexpected victory over leftist prime minister Victor Ponta in a run-off presidential vote on Sunday. Iohannis, who is the mayor of the central city of Sibiu and the head of the National Liberal Party, won 54.66 percent of the votes, the Central Electoral Bureau, BEC, said on its website quoting data from 96.5 percent of the polling stations in the country.