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October 21, 2021

FinMin Valcov: Romania mulls Eurobonds delay to grab lower yields

Romania may wait until the second half of the year to sell Eurobonds as a high funding buffer lets the government target lower yields, Public Finances Minister Darius Valcov told Bloomberg.

Deputy Managing Director at the Romanian State Treasury Diana Popescu was saying last month that Romania plans to prepare a Eurobond issue by July, following the success scored by Slovakia, which obtained record yields.

Bond-buying by the European Central Bank is spurring demand for Romanian assets, setting bond yields on a downward trajectory, Valcov said Tuesday in an interview with Bloomberg in Bucharest. The yield on the government’s euro-denominated debt due 2024 fell four basis points to 1.96 percent, data compiled by Bloomberg showed.

‘We had plans to issue in the first part of the year but as we see market conditions now I think there’s a lot of liquidity and prospects for borrowing costs to decline even further,’ Valcov said. ‘There’s no need to rush.’

Romania tapped global markets four times last year, raising the equivalent of more than $5 billion, a record, via sales of 10- and 30-year debt. This year, it plans to borrow 2.5 – 3 billion euros from the international markets in order to cover the due debts and fund its budget deficit.

Romania plans to use part of the funds it raised last year to repay a 1 billion-euro Eurobond due in March, according to Valcov quoted by Agerpres.

Speaking of the talks between Romania and the International Monetary Fund for a new deal, Valcov stressed that as long as the IMF does not have unrealistic demands, there is only a slim chance a deal won’t be struck this time. ‘Our views about the timing of spending allocation differ a bit, as we seek to avoid leaving the bulk of spending for December. But I’m confident we can find common ground.’

A budget-deficit target of 1.8 percent of gross domestic product should remain untouched, according to the minister. Romania had a fiscal surplus of more than 500 million lei ($130 million) at the end of January as revenue collection beat estimates, he said.

Romania has been given a Baa3 rating from Moody’s and is rated BBB minus by Standard & Poor’s and Fitch.


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