By Luiza Ilie
BUCHAREST (Reuters) – Romania’s Finance Ministry has raised its Eurobond issuance ceiling to accommodate foreign debt plans worth 9.5 billion euros ($10.4 billion) from April until December 2024, treasury chief Stefan Nanu said on Wednesday.
But Eurobond issuance targets for this year could be downsized given robust demand for domestic debt, he told Reuters.
Romania took advantage of investors pouring into emerging market debt at the start of the year, and has already funded 44% of its gross funding needs for 2023 so far.
The European Union state sold 2 billion euros of 2026 and 2029 Eurobonds and a $4 billion triple bond issue in January, while its domestic debt issues sold significantly more than planned, buoyed by surplus liquidity – in part driven by government spending – and interest from foreign buyers.
The finance ministry planned to issue as much as 8.5 billion euros in Eurobonds in 2023, but strong demand for domestic debt means it could downsize to 7.5 billion euros, Nanu said.
“It is possible we will cut Eurobond issuance considering the way domestic funding goes,” Nanu said.
The ministry also made private placements worth $300 million, which Nanu said were cost effective.
“We don’t want to do too many private placements because they are a marginal funding instrument. Especially since the plan is to have a green Eurobond in the fall.”
Nanu said the finance ministry had raised the maximum amount it could borrow through its medium term note programme (MTN), a non-binding foreign debt issuance plan that allows debt managers to tap markets through standardised documents.
The ministry has sold medium term notes worth 55.6 billion euros since the programme was introduced in 2012, approaching the programme’s ceiling of 56 billion euros. The ministry has raised it by 6 billion euros, adding foreign issues worth 4.6 billion euros that will mature this year and in 2024.
“The MTN programme is a ceiling, it gives us flexibility to issue, but we don’t have to fully execute,” Nanu said. “The issuance plan will be fine-tuned in December.”
All the main ratings agencies have Romania on their lowest investment grade with a stable outlook.
The yield on the benchmark domestic 10-year bond has fallen nearly 1 percentage point this year, and was last trading at 7.40%.
($1 = 0.9133 euros)
GRAPHIC – CEE bond yields
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(Reporting by Luiza Ilie; Additional reporting by Jason Hovet; Editing by John Stonestreet, Alison Williams and Christina Fincher)
