Finance Ministry releases new bonds

The Public Finance Ministry will release its first floating interest bond issue maturing in five years early next month, on November 6. The main feature of the new product, which the Finance Ministry hopes will help consolidate its position on the domestic market is that the interest paid to the holder will be made up of the inflationary rate during the period for which the coupon is calculated and a margin. The coupon is calculated for a period ended two months before the actual payment, for technical reasons. For instance, the inflationary rate used for the November 2003-May 2004 period will be the one published by the National Statistics Institute for September 2003-March 2004. The margin added to the coupon will be set during the auction for the bonds. “This decision announced last month is a natural response to the needs of the investors and to the necessity to use new instruments to improve the management of the public resources,” Enache Jiru, head of the Treasury said. The Finance Ministry is now shifting to the five-year maturity in an attempt to lure investors with the constant guarantee that the yield of such an instrument covers the ROL depreciation induced by inflation. ZF