Treasury sells 300m-euro bonds to banks

The State Treasury will put up for sale, on August 14, euro-denominated bonds worth 300m euros, according to an announcement recently published by the NBR, which acts on behalf of the state in this operation. The bonds, with an uncommon maturity of four years, carry a 5.25% interest per annum in euros. The bonds will be placed through public subscription, so that any investor that has one million euros (the face value of a bond) can become a buyer. The volume is quite modest, with dealers seeing the operation as a test for a larger subsequent issue. “The bonds are not highly interesting for a bank. Adding borrowing costs and the cost of covering the country risk, the rate gets to 5.3% per annum, and euro interests will rise in the future. On the other hand, there are enough euros sitting on small interests on the market and the surplus will increase after the NBR cuts minimum foreign currency reserves at the end of this month,” comments the economist of a domestic bank. As part of the agreement between foreign financial groups, the IMF and the EU, the state has pledged to offer fund placement alternatives as loan demand from the private sector has sunk.