Yields on Romanian bonds keep falling, near 5% for 12-month maturity.

By bne IntelliNews March 19, 2013
The yield on Romanias 12-month bonds decreased to 5.02% on Monday, March 18 - their lowest level since the country started the first primary auctions in 2005, the central bank said on its website. The size of the issue was RON 500mn (EUR 113mn) in line with the target. Yet, it was more than three times oversubscribed. The same low yield on the 12-month maturity was touched last year in April-May - when the annual inflation was at a historic minimum of 1.8%. Currently, the headline inflation is 5.7% and the energy price liberalisation maintains certain inflationary pressures while the exchange rate volatility is also significant amid the regional financial turmoil. The national currency weakened against the euro on March 18 to its lowest value since the beginning of the year. Separately, Romanias Treasury also managed to issue a RON 500mn bond with residual maturity of 85 months at an average yield of 5.61%. The oversubscription rate was more moderate - 1.37 times the amount on offer. The issue seems to be part of the Treasurys plans to increase the maturity of the public debt with the view of decreasing the risks prompted by constant roll-over of short-term debt. The Treasurys success in pushing down yields and issuing longer-maturity bonds is visibly caused by the foreign investors appetite for Romanian public debt and Romanian assets in general. The aggregated size of the two issues placed on March 18 - RON 1bn, is not particularly high but still the local banks reduced at the same time their re-financing requests in the central banks weekly repo-type operations. The demand, covered by the central bank, fell to RON 247mn the lowest value since mid-2011. The flow of foreign resources to local currency assets in the first months of the year, visible also in the local currencys strengthening, has visibly contributed to Treasurys recent successful issues.

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