State borrows RON over seven years at 7%

The Romanian state manages to borrow increasingly cheap on the local market, despite the social tensions and the deteriorated situation on international financial markets. The Treasury yesterday fully sold a bond issue worth 700 million RON (166 million euros) that matures in 2017, with bonds yielding an average 7% a year. This is slightly lower than the yield obtained at a similar auction held in April, when the average yield was 7.02% a year. That was the first time in two years that the Treasury issued bonds with such long maturities. Dealers say, however, that the interest rate at which the bonds were placed yesterday is unexpectedly low, in the context where bonds were traded at yields of over 7.2% a year on the secondary market. “Apparently foreign investors did not purchase anything, they were even more interested in selling Romanian bonds. The buyers were probably insurance companies and local banks that keep bonds until they mature, without adjusting their value based on market progression,” said the dealer of a local bank.