Romania is launching third FX bond issue this year
<p>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, <a href="https://www.bloomberg.com/news/articles/2024-05-21/romania-on-track-to-complete-fx-debt-sale-plan-with-euro-deal?mc_cid=af1c44a59e&amp;mc_eid=cd1f92f96c" rel="noopener" target="_blank">Bloomberg</a> announced on May 21.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.&nbsp;</p>

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

<p>The final results were not published yet.</p>

<p><em>iulian@romania-insider.com</em></p>

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