RECORD  The Ministry of Finance has borrowed 1.42 billion Euros from banks in Euro-denominated treasury certificates

The Ministry of Public Finance (MFP) has borrowed EUR 1.423 billion from the domestic market by issuing 1-year treasury certificates with a foreign currency coupon, exceeding the by EUR 923 million the EUR 500 million it had initially planned to raise, at an average yield of 4.25%, according to a press release by the Romanian Central Bank.

The Ministry of Public Finance has swept up over 80% of the amount made available by the 13 banks, of 1.759 billion Euros, as the offer of the Ministry was oversubscribed 3.5 fold.

Alexandru Nicolae Chidesciuc, chief economist of "ING Bank", considers that the loan is welcome, considering the large need for funding of the state budget, and said the Government may likely borrow more this year.

"It was to be expected that the yield for this issue would be lower than it was for the previous loan, as the current one had a 1-year maturity, unlike the previous one which had a 3-year maturity. The yield could go below 4% if the Ministry were to borrow using instruments with a shorter maturity of 6 months", said Mr. Chidesciuc.

The auction held yesterday by the Ministry of Public Finance was the third this year, after it issued foreign currency denominated bonds in August (for EUR 447 million with a 5.25% coupon with EUR 147 million above the initially planned value) and early this month, when the Treasury successfully raised almost EUR 794 million, double the announced amount, for the same yield.

The Ministry of Finance also secured an EUR 1.2 billion club loan from several Romanian banks.

During the first eleven months of the year, the Ministry attracted over 60 billion lei, (14.1 billion Euros), over five times more than in the entire year 2008. However, in November, the Ministry of Public Finances, had intended to raise 6 billion lei, however only succeeded to raise 1.73 billion lei, after the Finance Secretary of State Bogdan Drăgoi said in the beginning of this month that the Ministry would no longer pay yields above 10% on treasury certificates.

The government issued treasury certificates after the International Monetary Fund (IMF) delayed the disbursement of the third installment of the foreign loan, which was initially scheduled for December.

At the same time, the European Commission announced it had postponed the release of the third installment of EUR 1 billion, from the 2-year EUR 5 billion loan granted to Romania.

So far, the IMF has only disbursed the first two installments of the loan, worth a total of EUR 6.57, out of the negotiated package of EUR 12.95 billion.