Romania’s Treasury seeks to cut borrowing costs paid on primary retail market

The Treasury set a coupon of 6.55% for the 2-year state bonds on sale in the primary retail market in December, 40 basis points from 6.95% paid in November, and 65 basis points lower compared to October. The coupons for the other maturities have decreased accordingly to 7.1% for the 4-year maturity (-25 bp from November) and 7.5% for the 6-year maturity (25 bp from November), Cursdeguvernare.ro reported.

The yield curve has shifted downwards since June, before the first package of budgetary reforms that included a 2 percentage points VAT rate hike, by 80 bp for the 2-year maturity and 45 bp for upper medium (6-year) terms. This was despite the upward revision of the inflation trajectory for the second half of 2025 and the first half of 2026 following the VAT rate hike and the electricity price deregulation.

Despite both higher expected inflation and lower coupons, the Romanian state bonds still generate real positive yields:the 6.55% coupon for the 2-year bonds compares to an average consumer price inflation of under 3.5% per year over the next two years.

For comparison, one of the few 24-month deposits sold by a large bank (Maxiplus 24 luni) pays 3.8% subject to 10% income tax, which brings the real gain roughly in line with the expected consumer price inflation.

The maturity of the bonds denominated in euros sold by the Treasury starts from 3 years (3.75% coupon, 15 bp down m/m). The 5-year bonds denominated in euros pay 4.75% in December (-25 bp m/m) while the 10-year bonds pay 6.2% (-10 bp m/m).

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