Romania raised €3bn (1% of GDP)  on September 11 with two Eurobonds, amid high interest expressed by investors who placed €9bn of orders, in an attempt to cover part of the gap between the country’s actual financing needs and the initial plans –  which might range between 1.1% and 2.4% of GDP.  

The €3bn was the remainder of Romania’s planned external financing after it raised two-thirds of the full-year target — €5.6bn of €8.5bn — from the foreign market in January.

In the meantime, the target was pushed up significantly by insufficient tax collection. The government initially targeted a 4.4%-of-GDP deficit (consistent with the initial financing needs), but informally shifted the target to 5.5%-of-GDP during the summer and failure to implement any fiscal amendments by the end of the year would result in a 6.8%-of-GDP gap, according to the executive’s calculations. 

The maturities of the two Eurobonds are five and ten years.

The fixed coupons, subject to minor adjustments, were 255bp and 340bp above mid-swap, resulting in 5.5% (five-year maturity)  and 6.57% (ten-year maturity).

For comparison, Romania issued Eurobonds with the same maturities at the end of January 2023, when the spreads over the mid-swap were 195bp, respectively 340bp. 

The bonds were arranged by Citi, Erste Group, HSBC, JP Morgan and Societe Generale.

The Eurobonds were launched just after Fitch expressed rather optimistic expectations vis-a-vis Romania’s capacity to conduct the fiscal consolidation – but before the announcement of the concrete, promised fiscal amendments.

Fitch said Romania would be able to keep the public deficit at 5.5% of GDP – but this is still uncertain as the government may enforce corrective measures only from January.