Romanians invest RON 2.7bn in the second IPO for governmental bonds on the Bucharest Stock Exchange
The Ministry of Public Finance (MFP) attracted RON 1.3bn and EUR 289mn (in a total amount of RON 2.7bn – EUR 555mn), through the second IPO for the sale of government bonds for the population (FIDELIS) carried out this year through the Bucharest Stock Exchange (BVB) systems.
Thus, the value of the financing rounds carried out this year at BVB by the Ministry of Public Finance amounted to RON 4.74bn – almost EUR 1bn – (RON 2.52bn and EUR 457.4mn).
In the second IPO, unfolded between November 9th and 27th, Romanians placed almost 13,300 subscription orders for both government bonds denominated in RON and for those in EUR. The offer included government bonds in RON with maturities of one and three years, respectively, and an issue in EUR, maturing in five years.
The annual interest rate for the bonds denominated in EUR is 1.8% p.a., while for the bonds denominated in RON the annual interest rate is 3.5% p.a. for those maturing in 2021 and 4% p.a. for those maturing in 2023.
The government bonds in the FIDELIS issue started trading on BVB on Monday, December 7th, and can be bought or sold in a transparent environment at any time through authorized intermediaries.
“The success of the second offer of government bonds for retail investors, which has exceeded the previous one from the summer, proves that it was a very good decision to come back to the capital market with such instruments. To attract almost 1 billion euros from the population, in a difficult context for everyone, is proof that Romanians trust the Ministry of Public Finance and, implicitly, the Romanian State. This program continued not only due to its success, but also because it is a strategy of the State to finance itself from the citizens. Basically, by purchasing government bonds, the citizens participate directly in investment programs in the economy and we are all interested in doing well. There are various strategies in the world, and we see that the countries that are financing themselves in a significant proportion from their local resources have a greater stability of the public debt”, stated Florin Citu, Minister of Public Finance.
“The Ministry of Public Finance has always been a partner of the capital market and we are glad to see the success registered for the two Fidelis government bonds offers held at the Bucharest Stock Exchange. For many of the Romanians who participated in this offer, the government bonds are the first contact with the capital market, and we are convinced that some of the newcomers to the market will look at other investments available at BVB. The success of these two IPOs for Fidelis government bonds together with the financing rounds carried out by private companies can be translated into more than one billion euros, money that investors have set in motion through the capital market. This proves again that the capital market has been, is and will be an inexhaustible and efficient channel for financing companies, but also for the State, because we are talking about various sources of capital, respectively individuals, as well as investment funds, with assets of almost 42 billion lei, and privately managed pension funds, with assets of 72.6 billion lei”, said BVBs’ Chairman of the Board, Radu Hanga.
“The success of the two government bonds offers is impressive because it is money attracted only from individuals. We are talking about almost 1 billion euros, money invested by retail investors. We see that the population’s deposits continue to increase, reaching almost 250 billion lei. On the other hand, we see that inflationary expectations indicate a continuation of the period of modest interest rates, which means that more and more Romanians will have to look for more profitable investments for their money, and the stock market offers them a diverse range of such investments. We already see that the Romanian capital market has become more agile and investors are more attentive to the opportunities that come on the market, they have capital and take advantage of opportunities even in times of uncertainty“, stated BVB’s CEO, Adrian Tanase.
The primary offer for the sale of FIDELIS government bonds was intermediated by the Consortium formed by BT Capital Partners (Lead Manager&Intermediary) and Banca Transilvania (Distribution Group), Banca Comerciala Romana and BRD-Group Societe Generale (Intermediaries). The government bonds could also be purchased through eligible participants.
”The desire to generate returns from savings and to benefit from them in conditions of increased security are aspects that are now an integral part of the retail investor’s profile. The issuance of government bonds by the Ministry of Public Finance is a useful tool that allows investors to meet both requirements and listing them on the Bucharest Stock Exchange represents an additional advantage, in the form of flexibility. The remarkable interest for this second set of issuances, shows both the attractiveness of returns and the trust that retail investors place in the issuer and intermediaries, a fundamental aspect for the development of the long-term relationship between them and by extension, the capital market.” Daniela Secara, CEO BT Capital Partners.
“This second offering under the Fidelis program in 2020 re-confirms the growing preference of private individuals towards saving and placing their savings in financial instruments. It is significant that the amounts subscribed in November are higher than those recorded in the July-August offering, and this despite the difficult, pandemic-related market conditions. We see it as a clear sign that the population is eager to have viable placement alternatives for their savings and it is the duty of all market participants to encourage this behavior. The admission to trading remains a necessity and the rising liquidity of the already listed bonds issued in August is a clear proof in this direction. BCR is looking forward to the retail bond issues to follow, side by side with our consortium partners and, of course, with the Ministry of Finance”, said Valentin Popovici, Executive Director Financial Markets, BCR
“The second Fidelis Tbonds issue in 2020 actually strengthens the instrument with the lowest degree of risk for retail investors, due to the fact that they have the opportunity to exit such investments at any time. This qualifies the Tbonds issued by the Romanian Ministry of Finance through Fidelis program as an investment tool for almost all profiles of individual investors, thus having a viable benchmark for the performance of their securities portfolios,” said Irina Neacsu, Executive Corporate Finance Director within BRD.
The initial subscription of the bonds was not commissioned by intermediaries, and the income obtained from both interest and capital gains is not taxable. The minimum subscription threshold was RON 5,000, respectively EUR 1,000. Resident and non-resident individuals over the age of 18 up to the closing of the offer were able to invest in the issuance of FIDELIS government bonds.