Government securities will finally have a daily reference price

A new set of reference indicators are about to emerge on the Romanian financial market: every banking day, at 12:00, fixing rates for government securities from various issues of the Finance Ministry will be set, based on the model used in the calculation of ROBOR- which has become the main benchmark for the cost of RON-denominated loans.

Investors in treasury certificates and government bonds, from banks to pension funds, investment funds and insurance companies, through to non-financial companies and individuals, will finally have a set of solid price benchmarks, based on firm quotes displayed by a group of banks selected by the NBR, which will be based on a set of clear rules, inspired by the practice of Western markets. Depositories in turn are very much in need of relevant prices.

The operation of the fixing system is already being tested since the beginning of this month. The National Bank has agreed to the introduction of such a mechanism, which is set to run on the Reuters platform, which also supports the calculation system for reference interest rates of the interbank monetary market.

“A fixing system built closer to the method of establishing the ROBOR is important because banks’ portfolios of government bonds have grown over the last two years, and they need much more solid prices to evaluate these portfolios. Investors such as pension funds in turn need solid prices to evaluate their own portfolios and I think bond fixing will also contribute to stimulating the interest of foreign investors. I think Romania’s major challenge when it comes to financing its budget deficit is to attract that class of major investment funds – real money funds – to government securities,” says Marius Stoica, executive manager in charge of financial markets at BRD-SocGen.