Wednesday, February 1, 2012

Romanian Leu May Gain After Dollar Bond Sale, UniCredit Says

Feb. 1 (Bloomberg) -- Romania’s leu may strengthen against the euro after a sale of $1.5 billion of international bonds yesterday was a “big success” and showed improved investor sentiment toward the country, according to UniCredit SpA.

Investors should buy the Romanian currency as it is poised to gain to 4.25 per euro from 4.3477 yesterday, Gyula Toth, a Vienna-based strategist, wrote in a report to clients today.

The bond attracted total offers of almost $7 billion, Deputy Finance Minister Bogdan Dragoi said yesterday after the European Union’s second-poorest member sold 10-year notes at a yield of 6.875 percent. Yields on existing government notes in euros due in 2018 today fell 7 basis points, or 0.07 percentage point, to 6.40 percent by 11:15 a.m. in Bucharest, the lowest since November.

“Following the successful Eurobond issuance, the risk reward on short euro-leu positions improved significantly, and the weak exchange rate does not seem to be in line with the outperforming credit market,” Toth said. “We originally expected about $2 billion Eurobond issuance for the whole year, so the authorities have already covered 75 percent.”

The leu was little changed at 4.3454 per euro. The Romanian currency has lost 0.4 percent against the euro so far this year, compared with gains of 7.1 percent for the Hungarian forint, 6.4 percent for Poland’s zloty and 1.3 percent for the Czech koruna in the same period.

--Editors: Peter Branton, Linda Shen

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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