IIB raises RON300mn in second Romanian bond placement

IIB raises RON300mn in second Romanian bond placement
By Clare Nuttall in Bucharest September 26, 2016

The International Investment Bank (IIB) has returned to the Romanian capital market, raising RON300mn (€67.4mn) in its second local currency bond issue, the bank said on September 23. The issue was oversubscribed more than twice. 

Romania is one of only two countries outside Russia where the IIB has issued bonds, and its return to the Romanian market reflects increased interest from both Romanian and international investors, the bank said. The funding will be used to finance its projects in Romania.

The bank’s return to Romania “reflects our confidence in the local market and in the credibility of the national currency, as well as the high level of partnership relations with the Romanian investment community,” said Alexandru Florescu, deputy chairman of the IIB board, representing Romania and responsible for finance and risks. 

“As already demonstrated by our first issue in October last year, the IIB can significantly contribute to the further development of the Romanian market, and this is among the priorities of our institution as a development bank,” Florescu added. 

The issue has a maturity of three years and the interest rate has been fixed at 3.4% p.a., which is lower than the bank’s debut October 2015 placement, the bank said. 

Both institutional and sectoral investors invested in the Romanian bond issue, including pension and investment funds, insurance and brokerage companies. In addition to local investors, it also attracted investors from Austria, Croatia, the Czech Republic and Germany. 

Banca Transilvania Group, represented by BT Capital Partners S.A., was the organiser, together with Banca Comerciala Romana. 

The settlement will be carried out on the Bucharest Stock Exchange on September 27, with trading beginning on September 29, according to the IIB.

The bond issue will be used to finance the IIB’s projects in Romania, where it has already invested €50mn since its modernisation in 2012, and there is a “promising pipeline”, according to a bank statement. 

Investments in Romania so far include Romcab, a manufacturer of wiring and cables, and Bulgarian-Romanian dairy Tyras, which was funded under a co-financing deal with the Black Sea Trade and Development Bank. 

“Investing into IIB’s securities on the Bucharest Stock Exchange means investing into Romania’s future, as our Bank will use the proceeds for financing local projects,” said the chairman of the IIB board, Nikolay Kosov, in a statement. 

The new Romanian bond placement has raised the total financing attracted by the bank since it launched its long-term funding programme in April 2014 to €570mn.

The IIB’s strategy is to raise funds in the country where the money will be invested. To date it has placed its bonds – known as “mibovki” – in Russia and Slovenia as well as Romania. The bank also taps the Russian market, the largest and most liquid in the region, to raise funding for investments across its member countries.

The IIB’s first bond placement in Romania raised RON111mn – the largest amount raised by any international financial institution on the local market for six years. The deputy chairman of the bank’s board, Denis Ivanov, said in an interview with bne IntelliNews in May that the bond had become one of the most liquid on the Bucharest Stock Exchange.

The IIB was founded in 1970, but launched a comprehensive overhaul of its operations in late 2012. Its current member shareholders are Bulgaria, Cuba, Czech Republic, Hungary, Mongolia, Romania, Russia, Slovakia and Vietnam. 

The IIB is rated ‘BBB’ (outlook stable) by S&P, ‘Baa1’ (outlook stable) by Moody’s, ‘BBB-’ (outlook stable) by Fitch, and ‘A’ (outlook stable) by Dagong.