Romania has borrowed USD 1.2bn, RON 74bn funding needed in 2018

The Romanian state has emerged on international bond markets and attracted USD 1.2 billion due in 30 years, with investors offer being much higher than expectations. The state’s paid return is 5.2%, similar to a bond issue in USD in 2014, also for 30 years. The funding required for 2018 is of over RON 74 billion.

Investors have provided a total of USD 1.8 billion, despite the fact that most analysts estimated that the maximum amount that will be offered will not exceed USD 1 billion, capital.ro reports.

Arrangers of the issue were Citigroup, Deutsche Bank, HSBC, JP Morgan and UniCredit.

The Romanian state attracted EUR 2 billion from the international market in February, with yields of 2.5% and 3.3%, due in 12 and 20 years.

According to the Finance Ministry, the Government’s gross funding needs in 2018 amount to about RON 74 billion. The overall loans to be attracted by the Finance Ministry from domestic and foreign markets is influenced by the anticipated level of the budget deficit, of -2.97% of the GDP (approx. RON 27 billion) and by the level of debts refinanced in 2018 amounting to about RON 47 billion.

Given the target of limiting the currency risk and of developing the state bonds market, the budget deficit will be financed in a share of 75%.

The Finance Ministry envisages the issue of EUR 4.5-5 billion Eurobonds, depending on the developments on the markets, and drawings from contracted loans from international financial institutions of EUR 0.2 billion.

The ministry will also issue bonds on the domestic market amounting to RON 48-50 billion, with maturity structure of 30%/50% (short term vs. medium and long term).

Romania has‘investment grade’ ratings from the four rating agencies. Thus, S&P confirmed in March 2018 the ratings on long and short term for domestic currency and foreign currency at ‘BBB minus/A-3’, with stable outlook. Moody’s granted the Baa3 rating for long term debt, Fitch Ratings points to ‘BBB minus’ rating for long term debts in foreign currency and national currency, the same source reads.