European markets, tensions on the Romanian political scene increase borrowing costs

The rise in yields paid by the Finance Ministry at state bond auctions is due to the tense situation on European financial markets, liquidity structure in the banking system and political tensions in Romania, Mediafax quoted Finance State Secretary Cristian Sporis as saying, who reminded that the Finance Ministry drew financing at lower costs in the first half of the year, when it applied a pre-financing program to take advantage on yields declining to all-time lows on almost all maturities. The hikes against those lows were caused not just by problems in the euro zone, where 10-year borrowing costs rose by over 6 and 7 pc for Spain and Italy but also due to the situation on the banking system in Romania, Sporis said.“We are concerned rather than worried, given we have a comfortable liquidity buffer. The yield got at state bond auctions is the result of demand and offer, and the banks’ offer was influenced by both the expectations on the evolution of the monetary policy interest rate of the  BNR (which was declining in the first months of the year), as well as the position of liquidities in the banking system» he explained. Also, Sporis said that the sums drawn by banks from the  BNR via repo operations, got to  RON 11-12 bln on average operation in July, from RON 5-6bln a few months ago.

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