Romania’s Government under criticism over high borrowing cost

Former Liberal (PNL) finance minister and prime minister Florin Citu harshly criticised the Government where the Social Democrats (PSD) hold a leasing position, including through minister of finance Adrian Caciu, for accepting high borrowing costs knowing that the cost of loans will further increase through the year.

Romania raised USD 3.75 bln in the first week of the year at a price seen by Florin Citu as excessive.

The figures support such criticism, as the spread above mid-swap paid on the five-year maturity rose to 280bp from 150bp in January 2022, and the spread over mid-swap for the 10-year maturity has also nearly doubled to 350bp from 185bp in January 2022.

The higher USD interest rates, however, pushed up the final yields for the five and ten-year maturities at 6.72% and 7.22% this year compared to 3.15% and 3.72%, respectively, in 2021.

Supplementary, this year, the Government issued 30-year bonds at a spread of 385bp or a yield of 7.67%.

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