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BNR: Romanian Gov't bonds, among the best yielding in the region

The yields of Romanian Government bonds are among the highest in the region, while the margin compared with other yields in Central and Eastern Europe remained constant or even improved in the first half year 2013, according to the latest report on financial stability released by the National Bank of Romania (BNR).

BNR says one-year bonds in mid-2103 were offering a yield that was by nearly 4 percentage points higher than the yield of the German Government's bonds.

BNR explains that regionally the yields of the Romanian Government's bonds are among the most volatile. It says that there have been two times of significant rises in volatility this year: in January, when non-resident investors displayed increased interest in the Romanian Government's bonds, and May-June, when sizeable amounts of capital fled emerging markets for fears the Fed's programme of acquisition of financial assets will be rapidly and widely implemented.

The report indicates that yields continued to improve in the first half of the year, with increases in the value of medium and long-term notes issued. A significant cut in treasury certificates of up to one year maturity is explained as being in line with a process of fiscal consolidation that reduced short-term pressure on Romania's national budget.

Trades of Government bonds on the secondary inter-bank market of Romania plummeted in the second half of 2012, but it recorded a slight bounce in the first half of 2013 as domestic affairs stabilised and the interest of non-resident investors in the Romanian Government's bonds rekindled. A significant rise in the volume of trade was recorded in January 2013, when JP Morgan investment bank announced the inclusion of the Romanian Government's bonds in the composition of the GBI-EM global index, while Barclays Capital included the same bonds in the EM Local Currency Government Index benchmark index of local-currency sovereign bonds issued by the emerging markets.

BNR mentions that the bonds are also traded on the Bucharest Stock Exchange (BVB), but trades are less than 1 per cent the value of those performed on the secondary inter-bank market.

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