Wednesday, March 3, 2010

Romania Revives Eurobond, Seeks Further Sale in 2010

By Irina Savu, Caroline Hyde and Piotr Skolimowski

March 2 (Bloomberg) -- Romania revived its planned sale of Eurobonds postponed in November when the government collapsed and said it may return for additional borrowing later this year.

Romania is likely to sell about 1 billion euros ($1.35 billion) of bonds denominated in euros and may sell more securities before yearend, Finance Minister Sebastian Vladescu said in response to questions from Bloomberg on the sidelines of a conference in Bucharest today. Deutsche Bank AG, EFG Eurobank and HSBC Holdings Plc are arranging investor meetings starting March 8, he said.

“We are going on a road show next week to major cities: London, Frankfurt and somewhere in Switzerland, Zurich or Geneva,” Vladescu said.

Romania is seeking to take advantage of improved investor confidence since Prime Minister Emil Boc put together a Cabinet on Dec. 23 and lawmakers on Jan. 14 approved a plan to narrow the 2010 budget deficit to 5.9 percent ofgross domestic product from 7.2 percent last year. The International Monetary Fund, which suspended a 20 billion-euro bailout package as the government collapsed amid infighting, resumed payments last month, releasing the equivalent of 2.4 billion euros.

Bondholders returning to Romania have driven down the extra yield on government notes due 2018 to 278 basis points above similar-maturity German bunds, from as high as 374 basis points in December and 959 basis points at the beginning of 2009, according to data compiled by Bloomberg. The Bucharest BET Index of stocks has rallied 16 percent this year, beating a 3 percent decline for the benchmark MSCI Emerging Markets Index.

Fitch Ratings raised its outlook on Romania’s BB+ credit ranking to “stable” from “negative” on Feb. 3. Standard & Poor’s said in January it may raise Romania’s outlook after the resumption of the IMF agreement. The European Union’s second- poorest member is rated BB+ at S&P, the highest non-investment grade ranking, with a negative outlook. Moody’s Investors Service is the only ratings company that has Romania at investment grade, at Baa3.

The IMF, which demanded the formation of a new government and passage of the budget law before resuming payments, said last month the government will sell the bonds after the resumption of its loan payments.

Vladescu said on Feb. 8 the government will sell the bonds in March.

To contact the reporter on this story: Irina Savu in Bucharest atisavu@bloomberg.net or Piotr Skolimowski in Warsaw atpskolimowski@bloomberg.net or Caroline Hyde at chyde3@bloomberg.net

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