Romania's Treasury cut the yields offered on local currency retail government bonds for the third consecutive month in its July Fidelis issuance, mirroring the broader decline in borrowing costs on international markets. The exception was the 10-year euro-denominated bond, whose coupon was raised to 6.2% from 5.8% in June.

The Treasury has continued to lower coupons after increasing them in response to higher inflation expectations following the Middle East crisis. The coupons on the two-, four- and six-year leu-denominated bonds were reduced by 5 basis points (bp) compared with June, to 6.30%, 6.85% and 7.55%, respectively.

This is the second month the Treasury has offered a 10-year leu-denominated bond to retail investors. In the June Fidelis issue, investors allocated only 5% of the total RON 940 million (EUR 180 million) subscribed to the new 10-year maturity, which carried a 7.6% coupon.

Total subscriptions in the June Fidelis issue increased by more than 30% from May, the weakest Fidelis issuance on record, reaching RON 940 million. However, demand remained subdued in historical terms, with subscriptions still 4.8 times lower than the record February 2025 issue.

The euro yield curve steepened in the July offering. The coupon on the three-year bond was reduced to 3.90% from 4.00%, while the five-year coupon edged down by 5bp to 4.80%. In contrast, the 10-year euro bond's coupon increased to 6.20% from 5.80%.

iulian@romania-insider.com

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