Romanian eurobonds in high demand

Spectacular buy orders for the Romanian eurobonds, which saw all time lows for yields and margins above the benchmark interests on the market and a surge in trading prices in the last couple of days.

In just two days, the yields of the Romanian eurobonds shed more than 0.3 percentage points on the average. The yield of the bonds due in November 2005 and bearing a 11.5% coupon has dropped to less than 4% for the first time, while the eurobonds maturing in 2012 (8.5% coupon) have started being quoted below 6%. At the end of last week, Romanian bonds had come to trade at par instead of discount, which is a first time.

Luck came in form of Russia this time, which last week got a no less than two step rating upgrade from American Moody’s agency to the lower tier of the low risk investment category – Baa3 (investment grade). The improvement in the perception of Russia has moved the entire market of bonds issued by emerging countries, influencing even Chilean bonds.

The Romanian bonds have fully benefited from this favourable trend, albeit as far as the same Moody’s is concerned, they are no less than four steps behind Russia at the moment.

The demand for Romanian bonds was also helped by rumours of an upcoming upgrade in the ratings assigned to Romania by Fitch rating agency, which has already announced a positive outlook, and Moody’s, whose analysts have recently been in Bucharest for an evaluation. If confirmation of the rumours in question is delayed, the yields of the Romanian bonds might see corrections made, though.

“We should note that the margins above the benchmark interest of the “zero” risk instruments at which the Romanian bonds are now trading are much lower than those of other countries with a similar rating. The yield of the Romanian bonds is over two percent below the yield of those issued by Colombia for instance and only a little above those of countries rated as “investment grade” such as Mexico is,” Enache Jiru, head of the Treasury said. razvan.voican@zf.ro