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Finance Ministry to issue Eurobonds worth EUR 8bn during 2018-2019

The Finance Ministry envisages to issue Eurobonds worth about EUR 8 billion during 2018-2019 within the context of implementing the yearly plan to finance the budget deficit and to refinance the public debt, a Government Decicion published by the Finances informs.

During the mentioned interval, in order to cover the funding needs on the external markets and given the remaining amount of only EUR 930 million, the frame-programme for state bonds ‘Medium Term Notes’ (MTN) will be supplemented by EUR 7 billion, up from EUR 20 billion to EUR 27 billion.

Currently the bonds issued under the MTN are worth about EUR 10.1 billion.

The MTN is a non-binding feature that is concluded between the Ministry of Public Finance as an issuer and a group of selected financial institutions, within which the Government periodically issues securities state bonds on foreign markets based on standard contractual documentation.

This year, the Ministry of Finance has been present twice in the foreign markets. In April, when Finance collected EUR 1.75 billion through a two-tranche Eurobond issue. The first was a new issue worth EUR 1 billion, with a maturity of 10 years and a coupon of 2,375%. The second, worth EUR 750 million, was the reopening of the issue launched in October 2015, with the initial maturity of 20 years and a coupon of 3.875%.

Subsequently, in October, the state sold EUR 1 billion bonds on international markets by reopening the April issue.

The yield in October was of 2.16%, total demand being more than 2.7 times the supply. In April, bonds were placed at yields of 2,375% in the case of the new issue and of 3,875% for the second.

‘Romania Journal’ informed on Friday that the Government intends to borrow EUR 8 billion for the next two years, in order to cover the increasing budget deficit, after the waves of wage increases for state employees this year. Another reason is the Government’s intent to refinance some foreign debts that become due.

 

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