Romanian Leu Gains to One-Month High After Fitch Affirms Rating

The leu appreciated to the highest level in more than a month after Romania’s investment-grade credit ranking was affirmed by Fitch Ratings yesterday and the government sold five-year bonds at the lowest yield on record.

The currency expanded its advance this year as Fitch maintained Romania’s long-term government bond rating at BBB-, the lowest investment grade, with a stable outlook. Borrowing costs reached a record low at a sale of five-year bonds yesterday as demand for the country’s debt remains elevated amid inclusion in major emerging-market indexes.

“The leu made up some ground, after Fitch reaffirmed Romania’s sovereign credit rating,” Mihai Patrulescu, a Bucharest-based senior economist at UniCredit Tiriac Bank SA wrote in a note today. “The significant downward adjustment on issuance costs over a short time frame is indicative of the large interest for Romanian bonds.”

The leu advanced 0.2 percent to 4.3680 per euro by 4:20 p.m. in Bucharest, the strongest on a closing basis since March 8, according to data compiled by Bloomberg. The currency added 1.9 percent this year, the best performer among eastern European and African peers tracked by Bloomberg.

The government raised the planned 500 million lei ($150 million) in a reopening of securities due November 2018 at an average yield of 5.09 percent. That compares with a rate of 5.5 percent for similar-maturity debt auctioned on April 4. Demand totaled 1.36 billion lei compared with 1.48 billion lei at the previous sale.

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