Four investment banks selected to underwrite Romania's 500m eurobonds

How many banks have been hired to underwrite the eurobonds issued by Romania this year? “Two… no, in fact there’s four.”
The long selection process of the banks that will broker the eurobond issue ended with a communication glitch that leaves plenty of room for speculation.
The first official news, that surfaced during the Government session that was supposed to end with a decision in this regard, showed that the investment banks part of the mandated consortium were Deutsche Bank and JP Morgan.
The information was also used by the international press agencies and could be read yesterday on the Romanian Government website.
After two hours, the Executive came up with a press release that included, besides Deutsche Bank and JP Morgan, another two names: Citigroup and UBS Warburg. No explanations provided.
According to unofficial information, Deutsche Bank and JP Morgan had asked for the lowest fees – 0.10%.
It s however certain that it was hard to rank the banks using only the fee criterion, as, according to Finance Ministry officials, the eight shortlisted banks were engaged in a very tight competition and operated spectacular fee cuts. Practically, the earnings expected from fees went down to zero, as the banks were rather interested in the money they could get from the subsequent sale of the bonds they were to buy on their own. At any rate, given the 500m-euro value of the issue, any fee becomes insignificant when it must be split four ways.
Romania also worked with four banks last year, but then the issue was worth 700 million euros and the fee amounted to 0.275%. The selection of four banks points to the Finance Ministry’s plans to borrow more money, with the issue set to be significantly oversubscribed.
This year’s eurobonds have a seven-year maturity, as compared to 2002’s ten years.
The fact that Deutsche Bank, JP Morgan and Citigroup won hardly comes as a surprise, as they have all worked with Romania before. However, ING Barings exits the equation (although it also operates locally and has a longstanding tradition in such transactions), with a new name, almost unknown on the Romanian market having emerged instead: UBS Warburg.
razvan.voican@zf.ro