Bonds market is taking hesitant steps

Romanian bond market this year has started to take hesitant steps. At the beginning of the year, two public bond offers were launched and they are currently developed according to the initial schedule.

The latest company that managed to enter this market was Buzau-based wine producer Bachus, which wants to obtain 15.5 billion lei (0.6 million dollars) from investors, while International Leasing announced the payment of the first installment of the interests for convertible bonds worth 2 billion lei (0.1 million dollars) subscribed between May 2-15.

Before the beginning of 2000, only one public bond offer was made by the Siderca company, but it did not manage to be traded on an organised market following the issuer’s financial difficulties.

The total value of bonds brought on the capital market so far exceeds one million dollars, most bond investors being natural persons.

Mutual funds preferred to stick to their current investment policy, based on government bonds.

The representatives of these institutions, which cumulate resources worth 500 billion lei, are very pleased about the appearance of these new investment instruments, but believe that the market is still at the beginning and prefer to preserve the policy of minimal risk.

“We don’t intend to invest in Bachus bonds, as they would be quoted as having a third risk degree in our portfolio, which is not characteristic for our low risk policy,” said Dan Nicu, the manager of the company administrating the Foreign Trade Fund, whose assets stand at 35 billion lei. “These bonds might become interesting for us only after they are quoted on the market,” Nicu added.

Ilie Cenan, the chairman of the company that manages the Transilvania Fund, says that, due to the already established strategy, he cannot use funds for acquiring such newly issued bonds.

“For the time being, we have good placements, the performance of the government bonds within our portfolio being of 45%. We grant financing to the companies we have been working with for the past five years. Our targets are clear,” Ilie Cenan says.

Under these circumstances, characterised by institutional investors’ reluctance, the new Bachus bond offer will have to look for investors among natural persons. This category of investors perceives the alcoholic drinks business as being a low risk investment, benefiting from a good market. On the other hand, International Leasing bonds continue to follow the initial plan, the company having announced the first tranche of interests, which are to be paid by means of cheques issued by Citibank Romania.