Romania’s finance ministry on Monday issued 10-year bonds at an average yield of 7.92% (the coupon attached was 6.7%), a record low for the country’s long-term financing cost, according to data from the National Bank of Romania.
Specifically, the cost is 1.43pp higher than the previous opening of the same bond exactly one year earlier.
The GDP deflator is expected by the government forecasting body CNP at 9.2% this year, to drop significantly to 5.3% in 2023 and below 3% by 2025. In this context, the cost of financing 6.99% for the 43-month maturity and 6.93% for the 63-month maturity can also be considered high.
“Countries that entered these intertwined crises (Covid and geopolitics) with unsustainable twin deficits and implicitly relatively higher financing needs are more affected by global market turbulence,” explained Ciprian Dascalu, chief economist of BCR. , for Economedia.ro.
Dascalu says Romania’s proximity to the conflict zone has exacerbated the more general increase in borrowing costs in the Central and Eastern European region.
On the upside, the auction organized by the BNR for 10-year Treasury bonds on May 10 was strongly oversubscribed, with banks placing orders for RON 651 million – more than double the target volume of RON 300 million – and eventually being awarded RON 517 million worth of bonds.
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