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PM Ponta: Private financial markets trust Romania more than we do


Private financial markets trust Romania more than we do, Prime Minister Victor Ponta declared on Wednesday at the government offices of Victoria Palace; he was referring to the country's bonds issue at an interest rate below 3 percent, the press office of the Executive informed .

'It's a favourable international context for Romania. Yesterday, for the first time in our post-1989 history, Romania has issued bonds on the international capital market [at an interest rate] below 3 percent. Under 3 percent - Romania has never paid that in interests for its bonds. (...) This means on one hand that the private financial markets trust Romania much more than we do, and that every financing obtained in this period will add a lesser burden for the coming years, because now we have older loans at very high interests. When the interest is below 3 percent, I think every Romanian citizen who uses to go to banks knows the meaning of getting a credit below 3 percent. This means that when these loans reach their maturities, Romania will pay smaller interests. Indeed, our interest costs are lower by the year. This is just one sign of confidence, and I'm saying again I am glad for people abroad trusting Romania sometimes more than we do,' Ponta said. 

Romania has issued for the first time euro-denominated bonds on the foreign capital market at an interest rate below 3 percent, the Government's Press Office reported in a release to AGERPRES on Wednesday. 

"Romania issued bonds with 10 month-maturity, worth 1.5 billion euros, the yield being 0.72 percent lower compared to the 3.701 percent annual yield obtained at the last similar euro-denominated issue for 10 years, launched this April. The investors' significant appetite for the Romanian state bonds resulted in a quick subscription, 2.5 times more than the issued volume, in attractive financial conditions, without paying the share premium, at a yield of 2.973 percent per year," the source says. 

According to the release, this transaction enables Romania to "partially pre-fund the foreign needs for funding for 2015, reinforcing the level of the forex financial reserve." 

"The low level of the average cost and the diversified participation of investors reflect Romania's credibility abroad, a result of the economic policies and the appreciation for the development of the fiscal consolidation and the structural reforms the incumbent Government has adopted over the past two years," the release reads. 

The source also mentioned that the issue was managed by HSBC, Raiffeisen Bank International, Societe Generale and Unicredit Bank. 

As for the allocation of the bonds, they went to various investors from Germany/Austria (23 percent), Central and Eastern Europe (12 percent), Italy (10 percent), Romania (10 percent), the U.S. non-residents (9 percent), the rest of Europe (9 percent), Benelux (5 percent) and Asia and the Middle East (4 percent). 

As regards the distribution of bonds by categories of investors, the managers of funds won 62 percent, with the rest of the bonds being allotted to insurance, pension funds (21 percent), banks (13 percent), central banks and other types of investors (4 percent).