Romania USD Bonds

Romania sells $2.4 billion of USD-denominated bonds

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Romania raised a total $2.4 billion tapping international markets with US dollar-denominated bonds, with the maturity of five and ten years respectively, including the refinancing of dollar-denominated bonds issued in the previous years.

The $ 5-year bond is due on February 27, 2027 while the 10-year bond on March 27, 2032, according to Bloomberg.

For 5-year bonds, the indicative interest rate consists of the reference interest on 5-year dollar Treasury securities plus 160 basis points, while for 10-year bonds the indicative interest rate is 195 basis points above reference interest rate on 10-year dollar Treasury securities.

This year, the gross financing need of the Romanian state, or the total volume of funds to be raised by the Ministry of Finance from local and international markets, is about RON 145.4 bln (EUR 29 bln, or 11% of GDP), about RON 10 bln (EUR 2 bln) more compared to 2021, according to the ministry’s “Indicative program for issuing government bonds for 2022.”

The increase in the need for financing occurs in a context of rising interest rates, given that Romania borrows at costs well above the regional average.

The gross financing need to GDP ratio will remain, however, roughly around the same level as last year. This is despite the public cash deficit planned at 5.84% of GDP this year, down from 7.1% of GDP in 2021.

To secure the necessary resources, the Ministry of Public Finance plans to borrow around EUR 14 billion from international markets by issuing Eurobonds, including through private placements, in a volume of around EUR 10 billion (equivalent), depending on the developments, conditions and opportunities offered by these markets and by borrowings from international financial institutions estimated at around € 0.4 billion, Curs De Guvernare reported.

Romania also expects the disbursement of around EUR 3.7 bln by the European Commission under the Recovery and Resilience Facility.

The ministry does not rule out the issuance of green bonds to finance public debt, as soon as the legislative steps necessary for these instruments will be completed.

“The Ministry of Finance is considering the possibility of including green bond issues in the external market financing plan, depending on the completion of the General Framework for Green Bonds at the sovereign level, through coordinated efforts at ministries and identifying expenditures / projects that they will be financed through these obligations “, the ministry’s document read.

As of Dec 2, 2021,Romania sold 49.1 million lei and 1.65 billion euros of domestic bonds on the local market, and has tapped foreign markets for 7.0 billion euros worth of 2030, 2033 and 2041 Eurobonds.