The Ministry of Public Finance intends to change the legislation on the public debt to allow it buying back early or exchanging various government bonds.
The proposed changes were published as a draft Government Ordinance on the ministry’s website. It covers bonds issued on the domestic market and on the foreign markets, and aims at reaping the benefits of lower yields over the past years.
Buy back and exchange operations are intended ‘to manage the refinancing risks more efficiently, by seizing the opportunities of early buy back, replacing the circulating government bonds issued earlier with newly issued medium and long-term bonds,’ reads the justification note of the legislative proposal.
For the exchange operations, the policy of issuing liquid benchmark bonds should be corroborated with the policy of reducing the refinancing risk, the project mentions. For the government bonds issued on foreign markets, the steps should be similar to those for new issues of Eurobonds; for the bonds issued on the domestic market, there will be a bidding procedure for primary dealers using either the e-bidding application developed by the National Bank of Romania (the central bank) or a platform approved by the Ministry of Public Finance.
The project also eliminates the notions of historical exchange rate and the exchange rate differences applicable to the public debts; it completes the procedures for issuing bonds on the domestic market for individuals.