Tuesday, March 9, 2010

Romanian yields fall at 6-mth T-bill tender

BUCHAREST, March 8 (Reuters) - Romania sold 1.33 billion lei ($445.6 million) in six-month treasury bills on Monday, with the average accepted yield falling to 6.73 percent as expected, against 7.33 at a Feb. 15 tender, central bank data showed.

The issue was heavily oversubscribed with bids totalling 4.1 billion lei. The finance ministry had planned to sell 1 billion lei.

Yields have plunged from as much as 9.5 percent at the start of the year, helped by the International Monetary Fund's decision to free up 3.3 billion euros in international aid for the struggling emerging economy by the quarter's end.

Analysts expect a further fall in yields in the coming weeks, although most predict a correction later this year.

"The fall in yields is not a surprise. We see greater liquidity in the market, triggered by inflows from the IMF-led aid deal," said Vlad Muscalu, economist at ING Bank in Bucharest.

"We are optimistic in the short term ... but we foresee a possible correction (rise in yields) somewhere in the second half of the year."

So far this year, Romania has sold 10.3 billion lei of debt. The ministry had said it planned to sell 10-12 billion lei in the first quarter, as well as issue a Eurobond of around 1 billion euros.

Other say the auction results also reflect banks' appetite given lack of opportunities in the recession-hit economy:

"We're also talking about banks' appetite because of lack of opportunities in the real economy," said Ionut Dumitru of Raiffeisen Bank in Bucharest.

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