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December 6, 2022

Romanian bonds jump most since May 2010 after USD 1.5 bln sale

Romanian bonds rallied the most in more than 1 1/2 years after the European Union’s second-poorest member sold USD 1.5 billion in its first dollar debt sale, Mediafax informs, quoting Bloomberg. Yields on existing euro-denominated notes maturing in 2018 fell 18 basis points, or 0.18 percentage point, to 6.29 percent by 12:54 p.m. in Bucharest, headed for the steepest one-day drop since May 10, 2010. The cost to insure the debt for five years with credit-default swaps slid seven basis points to 392, the lowest in almost three months and less than 398 for higher-rate euro member Slovenia, according to CMA data. “The positive investor sentiment regarding Romanian credit is due to its scarcity value – this was the first dollar paper from Romania and hence will probably go in the benchmarks – and positive underlying credit story supported by a strong IMF anchor,” Gyula Toth, a Vienna-based strategist for emerging markets at UniCredit SpA, wrote in a report to clients yesterday. Investors should buy the leu as it is set to strengthen to 4.25 per euro, the strongest level since September 2011, from 4.3477 yesterday, Toth said in the report. The Romanian currency has lost 0.5 percent against the euro this year. “Following the successful Eurobond issuance, the risk reward on short euro-leu positions improved significantly, and the weak exchange rate does not seem to be in line with the outperforming credit market,” Toth said.

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