Romania Yields Slide to Record-Low at 1st Euro Bond Sale in 2013

Yields at Romania’s first sale of bonds denominated in euros this year slumped to a record low after the nation’s inclusion in benchmark emerging-market indexes increased the appeal of its debt.

The Finance Ministry raised 502.5 million euros ($669 million) of three-year bonds in the local market, more than the 150 million euros planned, according to data published on Bloomberg page. The average yield fell to 3.14 percent, the lowest for this maturity since the central bank started recording the data in 2005. That compares with a rate of 3.4 percent in a sale on Nov. 16.

Romania’s local currency debt is eligible for inclusion in the JPMorgan Chase & Co.’s GBI-EM Index Series in a rebalance on March 1, the U.S. bank said on Jan. 15. Barclays Plc also said on Nov. 6 it will add Nigeria and Romania to its emerging-market local-currency government bond index from March.

“This is the first step to finance about 1.8 billion euros of redemptions due out in the third and the fourth quarter,” Bucharest-based analysts including Ionut Dumitru and Ana-Maria Morarescu at Raiffeisen Bank Romania SA wrote in a note today.

The country plans to issue euro-denominated bonds on a quarterly basis this year as it is scheduled to repay 1.76 billion euros of state debt maturing this year, the Finance Ministry said on its website. It has raised 10.3 billion lei ($3 billion) of leu-denominated debt this month, the most since the central bank started recording the data in 2005.

Analysts at Erste Group Bank AG in Vienna and Piraeus Bank Romania SA in Bucharest estimated the yields for today’s bonds at between 3.15 percent and 3.25 percent.

The leu weakened 0.1 percent to 4.3575 per euro at 5:23 p.m. in Bucharest, depreciating for a third day.