Gov"t Bonds Maturity To Increase Constantly

Andreea Arăboaei

The Finance Ministry yesterday sold three-month discount bonds in the amount of 1.749 billion RON, the National Bank of Romania (BNR) announced. The average annual yield is 11.23%, slightly down from the previous auction. The Ministry had initially announced plans to secure 1.5 billion RON, but managed to obtain nearly 17% more, as commercial banks bade 2.73 billion RON. The auction held by the Finance Ministry in early April led to the sale of three-month bonds worth 1.48 billion RON with an average annual yield of 11.49%.

The auction was attended by 12 commercial banks as prime dealers: Alpha Bank, BRD, BCR, Banca Transilvania, Banc Post, CEC Bank, Citibank, ING, MKB Romexterra, Raiffeisen Bank, RBS and UniCredit Tiriac Bank.

Bogdan Dragoi, Secretary of State with the Finance Ministry, yesterday said that the Ministry would continue to issue bonds on the domestic market while constantly increasing the maturity, even though the foreign loan agreement was very close to sign-off. "We will keep to the initially announced calendar. The Finance Ministry"s decision is to focus on the domestic market. We will continue to use both foreign and domestic resources, but we will focus on medium- and long-term governmental securities," Dragoi said.

He added that the Finance Ministry was planning to increase the value and the volume of the transactions on the Bucharest Stock Exchange, explaining that 26 governmental bond issues were currently traded on BSE. According to him, the value of the payments towards governmental debt securities due in 2009 is 11 billion RON. At the end of April, Finance Minister Gheorghe Pogea said that the yield on governmental bonds would reduce upon the disbursement of the first tranche of the loan taken from the European Commission. Concurrently, the frequency of the bond auctions should decrease as the State would withdraw from the market.

The deficit target which the Government committed to after negotiations with the International Monetary Fund (IMF) for the foreign loan was 4.6% of the GDP (24.3 billion RON) for 2009. The agreement also stipulates mandatory quarterly deficit targets: up to 14.5 billion RON at the end of Q2 and 18.6 billion RON at the end of Q3. Romania managed to meet the Q1 deficit target of 8.3 billion RON with an actual deficit of 7.925 billion RON, the Finance Ministry announced.