Guaranteed interest makes 5-year bonds attractive

The five-year bonds issued by the State that come with an interest indexed in line with the inflation rate are in increasingly higher demand from commercial banks, although they had adamantly denied the appeal of such an instrument. The interest margin where demand and supply achieve balance stays at 4.89 points above the inflation, a level still regarded as comfortable enough by the Finance Ministry, which expects the inflationary decline to maintain. The latest issue auctioned last week was oversubscribed nearly four times the par value of 300bn ROL. The Finance Ministry took bids for up to 300.6bn ROL, given that 300bn ROL stood for the bonds subscribed by banks on their behalf and the remaining 600 million ROL accounted for the demands from bank clients, companies and possibly individuals. The bids received from banking clients, on which the Finance Ministry would like to rely more when placing its financing instruments, amounted to 5bn ROL. The five-year maturity with a floating interest is the longest available on the Romanian financial instruments market, though. Finance Ministry plans include issuing the first fixed-interest five-year bonds this year, as well. ZF