Romanias Treasury accepts 6.72% yield in 9-month auction.

By bne IntelliNews November 22, 2011
The Treasury of Romania accepted an average yield of 6.72%, slightly lower than the 6.74% yield achieved on September 21, central bank reported. The Treasury however managed to sell only half of the planned RON 1bn (EUR 230mn). The effects of the central bank's interest rate cut thus seem short-lived while the adverse regional developments are stronger. The failure to tap the US market announced earlier last week has also increased the lenders' bargaining power on the local government debt market that remains the sole source of financing for the Romanian government. We recall that after the 25bps monetary policy interest cut early this month by the central bank, the treasury's yields decreased slightly while the success ratios improved markedly. The yields of longer-maturity debt did not decrease at the same rates though and the government still has to pay nearly 7.5% for three-year bonds in spite of the sound disinflation outlook that will keep the consumer price inflation within a 3% y/y range in the medium term.

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