As much as 70% of the value of subscriptions in this month’s edition of the retail public debt scheme Fidelis is in securities denominated in the single European currency, Profit.ro pointed out based on the public data. Investors are thus reacting to the shrinking coupons attached by Romania’s Treasury to the leu-denominated bonds, but also to the exchange rate risk posed by the political turmoil.
One day before the end of the subscription period, RON 165 million (EUR 31.5 million) and EUR 71.3 million of bonds were subscribed by investors.
The greatest interest is seen for the instrument with the longest maturity, namely the 10-year euro government bonds maturing in July 2036 (R3607AE). Here, the total value of orders amounts to EUR 53.20 million, with investors being attracted by the annual interest rate of 6.20% – the only coupon that has not decreased compared to June.
Romania’s Treasury cut the yields offered on local currency retail government bonds for the third consecutive month in its July Fidelis issuance, mirroring the broader decline in borrowing costs on international markets. The exception was the 10-year euro-denominated bond, whose coupon was raised to 6.2% from 5.8% in June.
The Treasury has continued to lower coupons after increasing them in response to higher inflation expectations following the Middle East crisis. The coupons on the two-, four-, and six-year leu-denominated bonds were reduced by 5 basis points (bp) compared with June, to 6.30%, 6.85%, and 7.55%, respectively.
This is the second month the Treasury has offered a 10-year leu-denominated bond to retail investors. In the June Fidelis issue, investors allocated only 5% of the total RON 940 million (EUR 180 million) subscribed to the new 10-year maturity, which carried a 7.6% coupon.
iulian@romania-insider.com
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