Austria sells bonds in RON

Foreign investors bought sovereign bonds worth 100 million RON (28.5 million euros) on Monday. However, these were issued by the Austrian state not by the Romanian state, as part of its programme to fund public debt. The agency managing the Austrian public debt used the Canadian bank Toronto Dominion to find several investors interested in buying RON over a two-year period. This investment is reliant on the appreciation of the RON and comes with the risks specific to a sovereign debtor. Through a technical mechanism, Austria generated assets in RON, but actually borrowed in euros by exchanging the RON it obtained for euros. Starting from March, the Romanian legislation allows non-resident investors to buy bonds issued in RON without restrictions; these same investors were given the green light in April to set up term deposits of RON in Romania. Under the circumstances, several non-resident investors emerged, who sold euros to make investments in RON. ZF