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BVB's Tanase: Bond trading, entering unprecedented diversification


The bond segment is entering a stage of unprecedented diversification for the local capital market as investors who have had access to corporate, municipal and government bonds so far can trade the first mortgage bonds, Bucharest Stock Exchange (BVB) CEO Adrian Tanase told a conference on Wednesday. 

"The bond segment is entering a stage of unprecedented diversification for the local capital market. Investors who have had access to corporate, municipal and government bonds so far can now trade the first mortgage bonds listed on BVB. Mortgage bonds are a financing option often found on international financial markets, and now they are available in Romania as well, with Alpha Bank's flotation," Tanase told the floatation on Wednesday of the first issue of mortgage bonds on BVB. 

Alpha Bank Romania started trading its first 200-million-euro issue of mortgage-covered bonds on the main floor of BVB, a first in the financial and banking sector of Romania. 

The 5-year bonds paying variable interest are said to be covered by excellent mortgages and rated Baa2 by Moody's. Both local and international institutional investors - including the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) - participated in this first issue. 

"Today, we are opening a new chapter in the history of the local financial and banking system, bringing the first mortgage-covered bond issue to the Bucharest Stock Exchange. It is an important moment, as Romania is thus joining the map of countries that have an active mortgage bond market, modern instruments of financing that will contribute to the development of financial institutions and the capital market," said Alpha Bank Romania's Executive Chairman Sergiu Oprescu. 

The project was carried out in collaboration with the Barclays Bank PLC investment bank as lead manager and arranger, and Alpha Finance Romania as co-manager. PwC as was an agent, while Allen & Overy London and RTPR Allen & Overy as advisors to the arranger and Clifford Chance Badea and Clifford Chance London as advisors to the issuer. 

According to Alpha Bank, mortgage bonds are a common financing solution on international financial markets whereby the issuing bank seeks to diversify its funding sources and lower average cost by raising new funds for the development and expansion of its activities. 

Europe has a tradition of over 150 years in this area, with the European market covering 83pct of the mortgage-backed bonds issued, for a volume of issued mortgages of about 2 trillion euros. Over the last five years alone, mortgage bonds have been issued in the EU to the tune of 400 billion euros. At the level of the European Union, about 27pct of mortgage loans extended by financial institutions are funded by mortgage bonds, a solution commonly used by all banking systems in Europe.



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