Romanian Election Brings Junk-Level Risks for Bond Investors

Investors are treating Romania’s eurobonds on par with junk-rated debt after months of political turmoil, and now the weekend’s presidential ballot brings fresh risks for the currency and local debt as well.

The victory of ultranationalist George Simion in the first round triggered the resignation of the prime minister, sparked outflows from bonds and stocks and pushed the currency to a record low. Opinion polls suggest a tight contest in the runoff on Sunday, in which the Black Sea nation of 19 million will choose between the far-right candidate and the capital city’s centrist mayor.