Tuesday, January 22, 2013

Romania Yields Seen at Record-Low at 1st Euro Bond Sale in 2013

Yields at Romania’s first euro- denominated bond sale this year are expected to fall to a record after the nation’s inclusion in benchmark emerging-market indexes increased the appeal of its debt.

The Finance Ministry will sell 150 million euros ($199 million) of three-year bonds in the local market, according to a calendar published on Bloomberg. The average yield may fall to between 3.15 percent and 3.25 percent, the lowest for this maturity, according to analysts at Erste Group Bank AG in Vienna and Piraeus Bank Romania SA in Bucharest. That compares with a rate of 3.4 percent in a sale on Nov. 16, according to the central bank’s data.

“We are expecting the government to borrow significantly above the notional amount, paying yields at around 3.25 percent,” Bucharest-based analysts at Piraeus, including Camil Apostol, wrote in a note today.

Romania’s local currency debt is eligible for inclusion in the JPMorgan Chase & Co. (JPM)’s GBI-EM Index Series in a rebalance on March 1, the U.S. bank said on Jan. 15. Barclays Plc also said on Nov. 6 it will add Nigeria and Romania to its emerging-market local-currency government bond index from March.

The country plans to issue euro-denominated bonds on a quarterly basis this year as it is scheduled to repay 1.76 billion euros of state debt maturing this year, the Finance Ministry said on its website. It has raised 10.3 billion lei ($3 billion) of leu-denominated debt this month, the most since the central bank started recording the data in 2005.

“We expect solid demand and the ministry to accept bids around a yield of 3.15 percent,” traders at Vienna-based Erste wrote in a note today.

The leu weakened 0.3 percent to 4.3643 per euro at 11:34 a.m. in Bucharest, depreciating for a third day.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

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