Finance Ministry needs to raise at least 1bn euros on Thursday

The bond issue set to be worth 1 billion euros that the Finance Ministry announced for Thursday, November 25, is akin to a credibility test for Romania, President Traian Băsescu believes. He said on TVR (public Romanian television) that getting this loan from banks would be “proof” that “Romania did everything it was supposed to in 2010.” The test should be validated if the Finance Ministry managed to get an offer for “one billion and a half” at less than 5%, as the head of state said he would like to see happen. “We do not believe the success of such an auction would mean a credibility gain, because major banks are forced by the Vienna agreement (to largely keep their exposure unchanged i.e.),” ING Bank analysts say.

Băsescu’s statements came after a meeting organised at the central bank with major bank heads and treasurers on Wednesday to discuss ways to refinance the 1.4 billion-euro debt falling due on November 29. There are enough RON on the market, considering demand for loans from private sector remains low, yet bankers tried to argue their case for yields closer to 5% rather than 4.5% for the euro loan during the almost two-hour talks at the NBR.