Government to Issue New Bonds

Next Thursday, on November 25th, the Ministry of Public Finance will sell three-year bonds worth €1 billion on the domestic market.

According to a press release issued by the Finance Ministry, the sums raised by this means will be used for covering the budget deficit and refinancing public debt.

The Treasury announced it plans to raise 4.6 billion lei in November by selling bonds. The proposed value of the issue is similar to that of the last months, but it greatly exceeds the average of the sums which the Government actually managed to borrow.

The Finance Ministry borrowed the unprecedented sum of €1.423 billion from banks in November 2009 by selling one-year foreign currency-denominated bonds, thus exceeding by €923 million the €500 million on offer, at an average yield of 4.25 percent.

President Traian Băsescu declared on Thursday that Romania would have to turn to the domestic market for funding around the date of November 25th, in order to obtain the sum of €1 billion.

The President added that the Government contracted a 1.2 billion debt to banks last year.

At the beginning of November, for the first time in the last seven months, the Treasury sold three-year bonds worth over 120 million lei, from the planned 300 million lei, at an average yield of 7.1 percent.

Since the beginning of the year, the Finance Ministry has sold bonds worth nearly 33 billion lei to local banks.

Translated by: Ruxandra Câmpeanu
MA Student, MTTLC, Bucharest