Romania turns to domestic market after two FX bonds in January

After it already raised from the foreign market two-thirds of the entire year's target (EUR 5.6 bln of EUR 8.5 bln) in January, Romania may return with a new FX bond only in the second half of the year and even then for a smaller than planned issue, head of the finance ministry's treasury Stefan Nanu told Reuters.

In the meantime, the country would frontload on the domestic market where "the share of foreigners' holdings of domestic debt -- which stood at 19% at the end of November -- had room to rise," according to Nanu.

The 10-year yield fell to around 7.4% from a 9.5% peak in October, driven by expectations for faster disinflation.

The country took advantage of the unexpected change in investors' sentiment with bumper debt issuance - selling EUR 2 bln of 2026 and 2029 Eurobonds on January 30 after a USD 4 bln triple bond issue at the start of January.

"Given how much we have financed so far and that domestic issuance is going well, we do not intend to issue Eurobonds again in the first half," Nanu said.

The issue Romania may launch in H2 might be EUR 1 bln instead of EUR 2.5 bln or more (as needed for completing the full-year target), and it would most likely be green or sustainable, Nanu explained, while not ruling out further issues or private placement deals. He didn't mention, however, the Samurai or Panda bonds envisaged by the Government last year.

Domestically, Romania could continue frontloading financing as long as demand remains robust, he said, noting that boosting the share of leu currency debt mitigated currency risks and helped with rating reviews.

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