Romania’s Treasury announced lower coupons for the local currency and foreign currency bonds sold to households in November under its two schemes, Tezaur and Fidelis, after it announced that the cost of borrowing (10-year) dropped under 7% for the first time this year.
The Ministry of Finance carried out a successful operation to reduce the refinancing risk of government public debt, it announced on October 31.
The operation consisted of exchanging a series of government securities with short maturity for a new series of long-term bonds, thus moving the payment obligation further into the future.
Specifically, the ministry exchanged bonds maturing on April 22, 2026, and June 24, 2026, with a new series of bonds with a much longer maturity, on April 25, 2035, for RON 450 million. Through this type of operation, carried out with a bimonthly frequency, the Ministry of Finance aims to reduce the refinancing risk, which can influence the state’s borrowing cost.
This action is in line with the objectives assumed by the Government Public Debt Management Strategy.
“This transaction represents an important component of our risk management strategy. Achieving a long-term borrowing cost of 6.93% – the lowest level this year, although still high – is not a coincidence, but proof that fiscal discipline and the commitments assumed in the dialogue with the European Commission are validated by the markets. By pre-financing and extending the maturity of debts, we ensure that we avoid additional pressures on state costs, transforming investor confidence into concrete and sustainable benefits for the public budget,” declared the minister of finance, Alexandru Nazare.
The coupons attached to the bonds sold to households have decreased as well.
Thus, the government will pay 7.7% for the 6-year local currency bonds in November, down from 7.9% in August-October and 7.95% in June-July. The coupon for the 4-year local currency bonds also dropped to 7.35% from 7.6% while for the 2-year maturity, the coupon was cut to 6.95% from 7.20%.
For the bonds denominated in euros, the Treasury will pay 6.3% for the 10-year maturity, down from 6.3% in October. The coupons for the 5-year maturity dropped to 5.0% from 5.25% while that for the 3-year maturity decreased to 3.9% from 4.15%.
iulian@romania-insider.com
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