Romanian state raises EUR1.75bn in two long-term Eurobond issues

The finance ministry raised EUR1.15bn in a 10-year Eurobond issue with 2.875% interest rate and EUR 0.6bn through a 20-year Eurobond placement with 4.125%, according to a release of the authority. The placements were made at competitive margins above mid-swaps, the release said. Hence, the 10-year issue was placed at 3.029% average yield and the 20-year issue at 4.234%. The issues were 1.6 times oversubscribed, as the initial demand exceeded EUR2.8bn. The funds will be used to strengthen the Treasury’s fx reserve and to diminish costs with long-term debt and not to finance current needs, as speculated, Finance Minister Eugen Teodorovici underlined.

Romania tapped international markets in February, when it raised EUR2bn by launching two new Eurobonds issues with 12- and 20-year maturity. The finance ministry also borrowed USD1.2bn in another 30-year international bond placement in June. The borrowing target for external borrowing is set at EUR4.5-5bn in 2018. Some RON48-50bn should be raised from the domestic market. The government estimated total financing needs at almost RON72bn (7.6% of GDP) in 2018, out of which more than RON28bn should cover the projected budget gap (3% of GDP).

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