Romanian Treasury pays higher yields on retail bonds in October

For the one-year maturity, the Treasury will pay a 6.5% coupon, up from 6.2% in August-September. Earlier in March, before the political crisis emerged in May and the Treasury’s cash position was strengthened by Eurobond issues, it tested the retail market with a 5.85% coupon for this maturity.

For the three-year maturity, the coupon was increased to 7% in October from 6.75% in August-September. The lowest coupon offered this year was 6.5%, in March.

For the five-year maturity, the coupon saw the sharpest increase, rising by 35 basis points to 7.5% from 7.15% in August-September.

The higher yields come amid elevated borrowing costs for the Romanian government following months of political uncertainty and fiscal concerns.

The situation has also deteriorated on the interbank market. On October 1, the Ministry of Finance rejected all offers submitted by banks at an auction for 58-month government bonds, effectively failing to sell any of the bonds on offer.

The ministry had intended to raise RON 500 million, but considered the yields demanded by banks unacceptable. The participating banks submitted offers totalling only RON 250 million, half the amount the ministry intended to borrow.

The higher yields on retail bonds and the failed auction come amid elevated borrowing costs for the Romanian government following months of political uncertainty and fiscal concerns.

The National Bank of Romania (BNR) projects headline inflation at 3.8% y/y in September 2027 and 2.8% y/y at the end of its forecast horizon in June 2028. The central bank’s inflation target is 2.5%, with a tolerance band of +/-1 percentage point.