Leading investment banks fighting over Romanian eurobonds

The big investment banks are preparing for a deal that could help them climb higher in the international transaction rankings: Romania is launching a new eurobond issue, worth 500 million euros.
Although the actual value of the deal is not very high, the international markets’ hunger for this type of investments has led many banks to start wooing the Finance Ministry and the National Bank of Romania (NBR).
Last year, 14 banks fought over the ten-year eurobond issue.
Considering the increasing demand for Romanian bonds in the past three years and the constant rate cuts, the battle for this year is expected to get tough, first of all at the level of transaction brokering costs.
“They are definitely interested. Now that the time is getting near, we are getting lots of calls from the interested banks,” says the NBR vice-governor Cristian Popa.
American group JP Morgan is also looking to offer its services, after having brokered the last two eurobond issues.
Together with Schroeder Salomon Smith Barney, JP Morgan last year managed to feed the US investors 11% of the ten-year eurobonds, up from the two percent in 2001. In fact, the Finance Ministry was considering a direct approach of the American markets, but the dollar’s plunge has ruled this option out.
Dutch group ABN Amro is the only institution to have officially voiced interest in brokering the transaction.
Although deemed as on one of the best European institutions operating on the bond market, ABN Amro can be considered an outsider, since it has not managed to earn any mandate from the Romanian Government.
The mandate is also eyed by the German banks, led by Deutsche Bank, especially since the German investors have displayed the biggest appetite for Romanian bonds in the past two years, subscribing 27% of the amounts borrowed by Romania.
Moreover, according to market sources, Credit Suisse First Boston is also among this year’s favourites, as it has already increased market presence in Romania.
Last year’s bond issue prompted record demand, as Romania attracted some 750 million euros, although investors’ demand amounted to 2.5 billion euros.
“This year’s issue will be launched in the first half. We are mulling over the exact time and details of the bond issue, with the final decision to be made depending on the international capital market conditions,” says Enache Jiru, a state secretary with the Finance Ministry in charge with foreign affairs.