This year, 11 mayoralties opted to finance themselves through the stock exchange

• Transactions with bonds and treasury certificates have exceeded 1 billion lei

Almost one third of the total of issues of bonds launched by Romanian mayoralties entered the market in 2009, according to data published by the BSE.

Right now, the Bucharest Stock Exchange has 29 municipal bonds listed. Bonds issued by the Mayoralty of Bistriţa, which have the longest maturity, (November 25th 2029), began trading on December 10th, at the same time with bonds issued by the city of Bacău.

Growing investor interest in bonds led to a strong growth in the volume of bonds transactions, whereas stocks turnover declined significantly, to a 5-year low in terms of liquidity.

So far, turnover of bonds and state treasury certificates exceeded 1.06 billion lei this year, far above the volume of 2008, of 231.92 million lei, according to BSE data.

The average daily volume of bond transactions increased four times, to 4.44 million lei, as opposed to 927,000 lei, in 2008.

However, the municipal bonds market remains rather small and illiquid.

Mihail Ion, president of "Raiffeisen Asset Management", considers that under the current circumstances, major bonds issues are rare, because there is a shortage of investors willing to place their resources in this kind of investments.

"I think there is a need for more transparency when it comes to the spending of money by municipalities, in order to attract more investors", Mr. Ion considers, who added that he doesn"t expect any significant increases in the size of bonds issues in 2010, which are currently in the tens of millions range.

These types of financial instruments are more appropriate for pension funds, bond funds and insurers.

Since buyers of bonds are almost exclusively institutional investors, the largest trades in this market are intermediated by banks and brokerage firms owned by major financial groups.

In the first eleven months of the year, BRD Groupe Société Générale intermediated 30% of the total volume of bonds and treasury certificates transactions, whereas ING Bank and Piraeus Securities Romania intermediated 19.4%, and 15.8%, respectively.