Romania is launching third FX bond issue this year

Romania is getting close to completing its foreign debt sale plan for the year with a new Eurobond sale as the risk of a wider-than-expected budget deficit is expected to boost funding costs, Bloomberg announced on May 21.

The country, which has already raised EUR 7.9 billion in dollar and euro-denominated FX bonds from international markets this year, is offering fix-coupon bonds due 2032 and 2037.

The indicative cumulated volume for the FX bonds was announced at EUR 3 billion, and this is expected to be the final outcome, according to the latest information.

The government of Romania last week took steps to increase the ceiling of the Medium Term Note (MTN) scheme by EUR 7 billion to EUR 75 billion, citing the EUR 8.5 billion financing needs in 2025 but also another EUR 0.6 billion-1.6 billion issues this year and potentially EUR 1 billion in case not all the Resilience Facility money (EUR 2 billion in loans) are disbursed in 2024.

FX bonds may be issued to pre-finance next year’s budget deficit, the Finance Ministry implied. But the higher MTN ceiling will also cushion potential fiscal slippage this year - a scenario not mentioned by the government nevertheless very likely.

The volumes subscribed by investors in Romania’s ongoing FX bond issue amount to EUR 9 billion, and the cost is the midswap rate + 255 basis points (bp) for the 8-year bond (midswap being at 2.78% currently) and midswap + 290bp for the for 13-year (midswap at 2.79%), according to Bloomberg.

The initial guidance for the cost of the bonds was announced at 285bp and 320bp, respectively.

The final results were not published yet.

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