Finance Ministry allows T-bill yields to start slow climb

The Finance Ministry has allowed a slight increase in T-bill interests, after having rejected the banks’ bids twice. The yields have climbed less than half a point, so far.

However, the market has been deeply affected by the drop in interests and the change of the initial strategy aiming at longer maturities. Because of the plunging interests, the domestic market was practically abandoned as a financing source, as it was considered too expensive. #leadend#And this all happened in the year when, according to Finance Ministry officials, the domestic market was supposed to become the main funding source, replacing the foreign market.

The Finance Ministry came to reject even the bids for annual bonds, after having accepted a minimum increase in interests last week, up to 15.45%. But this time, the banks asked for more, as the interest offered by the National Bank of Romania (NBR) amounted to 19.25% for one-month deposits.

For a six-month maturity, the yield went up to 15.80% on Tuesday, from 15.54% two weeks ago, when the latest auction took place and bids were partially accepted. By rejecting bids with higher interests, the Finance Ministry only raised one third of the scheduled amount. NBR is thus left to purge the market, at the new interest. Though the National Bank initially intended to attract 1,600 billion ROL, it eventually raised 2,200 billion ROL from the market.

At the same time, many investors deemed as losses the T-bills bought in the first half of the year, including the state bonds maturing in three years at 12.9% annual interest.