Romania raised EUR 4 billion on October 2 with its fourth FX bond issue this year, to finance the year’s budget deficit, which was recently revised upward, and also to buy back bonds maturing in 2026, according to Ziarul Financiar, quoting Bloomberg data.
Romania had previously issued FX bonds worth EUR 7 billion and USD 5 billion this year in February, March, and July.
The year’s public deficit is expected at RON 159 billion (EUR 32 billion) according to the revised budget planning – RON 25 billion (EUR 5 billion) more compared to the initial draft approved in January.
Romania invited holders of three FX bonds issued maturing in 2026, amounting to EUR 1.3 billion, EUR 1.8 billion, and EUR 1.15 billion, respectively, to buy back in advance their bonds.
Regarding the FX bonds issued on October 2, Romania raised EUR 2 billion for the 7-year maturity and EUR 1 billion each for the 12- and 20-year maturities.
The initial indicative price was higher, but eventually, due to good demand, the cost of borrowing decreased to midswap plus 295 basis points (bp) for the 7-year maturity, down from the 355bp spread paid in March during the political turmoil. The cost of borrowing was 345bp above midswap for the 12-year maturity and 370bp above midswap for the 20-year maturity.
The arrangers of Romania’s latest FX bond issue are JP Morgan, Citi, Erste Group, HSBC, ING, and Raiffeisen Bank International.
The demand was robust and the investors placed orders for a total of EUR 17.5 billion. Borrowing costs have been significantly reduced compared to those announced as indicative at the opening of the issue.
At the opening, seven-year bonds were quoted at MS+340bp (the 7-year midswap rate was at that time 2.51%), 12-year bonds at MS+385bp (the 12-year MS was 2.77%), and 20-year bonds at MS+415bp (the 20-year MS is at 2.93%), according to Profit.ro, citing Bloomberg data.
iulian@romania-insider.com
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