Friday, May 8, 2009

Romania's 5-yr bond yields fall, IMF helps

BUCHAREST, May 7 (Reuters) - Romania's 5-year treasury yields fell by 11 basis points to 11.39 percent on Thursday as investors took a kinder look at Romania after it secured a 20 billion euro aid package led by the International Monetary Fund.

An improvement in regional sentiment also helped, analysts said, after the IMF said it had overstated eastern Europe's financing needs. This led to a rise in currencies, shares and debt prices across the region.

Reflecting a relative stabilisation on Romanian markets after a sharp slide at the start of the year, the central bank cut interest rates by 50 basis points to 9.50 percent on Wednesday to help the economy trampled by global financial woes.'This new regional optimism is behind the falls in interbank interest rates, yields and ... the central bank's decision,' said UniCredit's Rozalia Pal in Bucharest.'

At the same time, we notice an improvement towards Romania due to ... the (aid) loan.'Romania sold 268.7 million lei ($86.8 million) in 5-year paper, a little less than half the amount it planned, which is not unusual due to poor demand for treasuries that carry longer maturities, analysts said. The bulk of Romanian debt offerings this year are in 3- and 6-month bills.

Meanwhile, Hungary sold slightly more bonds than planned at auctions on Thursday, aided by an improved mood on emerging markets and confidence its financial situation is stabilising after restarting regular bond auctions last month.Romanian treasury yields have held virtually flat around 11.50 percent across the curve since Febryary, after falling sharply as much as 14 percent in January when market sentiment took a dramatic dive.The finance ministry has cranked up issuance this year, selling just under 30 billion lei so far, more than double last year's 12.5 billion lei, as the government struggled to meet vast spending needs and settle massive 2008 invoices.

The ministry has yet to announce a total target issuance figure for this year.

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