Finance Ministry borrows EUR 2bn from foreign markets with maturities of 12 and 20 years

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Romania has attracted EUR 2 billion from the foreign markets on Thursday, through a two-tranche issue of Eurobonds, with maturities of 12 years and 20 years, with the lowest credit risk margins for these maturities, the MFP informs.

“On February 1, 2018, the Ministry of Public Finance borrowed EUR 2 billion from the international financial markets through a Eurobond issue in EUR, in two tranches, of which EUR 750 million with maturity of 12 years, with coupon of 2.50% and EUR 1.25 billion with maturity of 20 years with a 3,375% coupon. The issue enjoyed high interest from the investors, being oversubscribed more than twice,” the ministry informs.

According to the quoted source, the transaction is part of the external funding plan for 2018, this issue providing Romania with an important part of the financing needs from foreign markets for this year, while also strengthening the foreign currency reserve available to the State Treasury. At the same time, through the chosen maturities, Romania has pursued the objective of extending the maturity curve in EUR.

The overall demand was of more than EUR 5.3 billion, from about 300 subscription orders from investors, with the final demand at the set price exceeding EUR 4 billion (EUR 1.7 billion for the 12-year tranche and EUR 2.4 billion for the 20-year tranche). The investment base of the transaction has been diversified geographically and by investor types for both tranches, with participation of 28 countries for each tranche.

The issue was mediated by Barclays Bank PLC, Erste Group Bank AG, Societe Generale, Unicredit and ING Bank NV.

The Finance Ministry will also issue a volume of government bonds on the domestic market of RON 48-50 billion, with a maturity structure of 30%-50% (short term vs. medium and long term).

Romania has a favourable investment rating, “investment grade”, from the four financial evaluation agencies. Thus, in December 2017, Standard & Poor’s (S&P) confirmed the long-term and short-term foreign currency and local currency ratings for Romania at BBB minus/A-3, with stable associated outlook. From Moody’s, Romania has Baa3 rating for long-term debt from Fitch Ratings the ratings for long-term debt in foreign currency and local currency of Romania are “BBB minus”. The Japanese rating agency JCR reconfirmed last spring the country’s rating at BBB/BBB+ for long-term debt in foreign currency and local currency. The rating outlook is stable.

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