Alin Tişe, CJC: "Major investments must be supported by several generations; bonds respond to this desire"

Investments in major infrastructure objectives, with a period of use of decades, must be supported by several generations, and the bonds represent a form of financing through which this objective can be achieved, said yesterday Alin Tişe, the president of the Cluj County Council (CJC), on the occasion of the listing of the Council's bonds on the Bucharest Stock Exchange (BVB).

Alin Tişe said: "Today's event is extremely important for Cluj County Council and for the people of Cluj, because it represents a step forward in everything that means the development of Cluj county. Currently, the County Council is running projects worth over one billion euros, and the 76 million euros are added to this amount. In a statistic I saw these days, Cluj County is, after Bucharest, the county with the highest GDP per capita in Romania. And in terms of credibility, according to the rating established by international bodies, Cluj county is in category A, above the sovereign rating of Romania, which helps us a lot to bring resources for the development of the county".

The bonds were sold in December of last year, through a private placement, the main buyers being banks, but also investment funds and pension funds. The securities, with a nominal unit value of 100 euros, have a maturity of ten years, with maturity in 2033 and an early repayment option in 2029. The interest is 3.25% plus EURIBOR at six months.

According to the president of the Cluj County Council, the money collected from the market will be directed to two categories of investments. "A first category is the investments that we can complete this year. There are schools, roads, hospital wards and even special schools. The second category are the objectives for which the Cluj County Council has already obtained European funding and the obligation to co-finance a part, depending on the project. There are projects that will not end this year, but that need co-financing (...). Our intention is to analyze the possibility of expanding this operation to take more money, to build a regional monobloc children's hospital from scratch", said Alin Tişe.

The president of the Cluj County Council emphasized that, after a thorough analysis and after consultations with specialists, it was concluded that bond financing is a way by which several generations of Cluj residents will pay for the investments currently made in major objectives.

"It is normal for investments in a hospital that pay off in 50 years to be paid in just two years, as long as several generations use the hospital. A stadium is made in two or three years, but is it normal to be supported by generations since then, although its life span is 50 years? Placing the responsibility and obligation to bear investment by multiple generations who actually enjoy these goals was a defining element we had in mind when we decided to go with this alternative financing option ", said Alin Tişe.

The president of the Cluj County Council added: "The reason why many cities and counties fail to develop is because they cannot support, from a financial point of view, the value of these huge investments. After consulting with the specialists, we came to the conclusion that it is rather natural that these investments should be borne by several generations, and bond issues respond to this desire - to carry over 20 or 50 years the responsibility of a major objective that has amortization period 50 years. It is a much more profitable option for the citizens of a county and less stressful for a generation or two, which has to bear a major objective".

The funds raised as a result of the placement are intended for the refinancing of the local public debt and the co-financing of some local public interest investment objectives of the Cluj County Council. The investment objectives of local public interest aim at: the modernization of some county roads part of the Northern Transylvania regional route, the construction of a headquarters for the school center for inclusive education, the modernization of the emergency clinical hospital for children and other hospitals in Cluj-Napoca, the restoration historical monument, Banffy Castle, according to a press release.

The private placement was carried out by the consortium formed by BT Capital Partners, Alpha Bank and Raiffeisen Bank, while VMB Partners was the financial consultant of the Cluj County Council for the bond issue.