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March 8, 2021

Finance Ministry borrows over RON 960 M from banks

The Finance Ministry (MFP) borrowed on Thursday RON 960.7 M from banks, through an issuance of one-year government bonds at an average yield of 0.7 percent per year.

The value of the issuance was RON 1 bln, and the banks subscribed more than twice that value, namely over RON 2 bln.

The Ministry plans to borrow RON 3.645 bln from commercial banks in May – RON 3.3 bln through seven tenders for treasury certificates and government bonds, and RON 345 M through supplementary sessions for non-competitive offers related to the bond tenders.

The sums will be used to refinance the public debt and to finance the budget deficit.

In 2016, the total volume of loans that the MPF will seek to contract on the domestic market through the issuance of government bonds is determined by the estimated level of the budget deficit (2.8 percent of GDP, around RON 21 bln), half of which will be financed from the domestic market and half from external markets, and by the level of refinancing of RON- and forex-denominated government bonds due in 2016 (around RON 38 bln, of which almost RON 31 bln from RON-denominated issuances and RON 7 bln from EUR-denominated issuances).

Likewise, the Finance Ministry is considering borrowing EUR 4.5 bln from external markets, depending on the developments registered there and the opportunities offered by those markets, bearing in mind the reimbursement level related to the issuance of Eurobonds issued on external markets and due in June 2016 (EUR 1.5 bln) and the need to consolidate the State Treasury’s forex-denominated reserves.

Thus, financing from external sources will be carried out through the MTN programme, by issuing Eurobonds worth approximately EUR 3 bln and by drawing around EUR 1.5 bln from loans contracted from international financial institutions.

MFP also plans to issue RON 48-50 bln worth of government bonds on the domestic market, namely RON 14-15 bln in treasury certificates and RON 34-35 bln in benchmark bonds.

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