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FinMinCitu: The 3.3 billion euro loan gives us comfort of financing all expenditure foreseen in budget

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Florin Citu

We have gone out on the international markets and the interest in Romania has been almost 14 billion euros, of which we have chosen to borrow 3.3 billion euros, the Public Finance Minister Florin Citu said after the government meeting on Wednesday.

He specified that the loan offered the possibility of financing expenditure from the budget without any problems.

"Regarding the loan of 3.3 billion euros on the financial markets, I keep in mind that a few weeks ago the Tariceanu-Ponta-Ciolacu triad accuses us that this Government cannot borrow, no one wants to lend this Government. We have gone out on international markets, where we are very thoroughly judged and the analysis that these investors are doing on how we govern is superlative, and the interest in Romania has been almost 14 billion euros. Of these 14 billion euros, we chose to borrow 3.3 billion euros, because we had already borrowed 3 billion euros at the beginning of the year. If you look at the average yields we borrowed in 2020 on the international market you will see that there is a historical minimum average for everything that has been done so far. Also during this period, in April and May, we borrowed cheaper than the Social Democratic Party borrowed last year, in the same period. What we did with that loan makes it very clear that we are very well seen today, on the international markets. There is very high investor confidence in this Government, if the interest was so high. It was, in fact, the most successful issue of bonds in this period of crisis and there were several countries that issued bonds. I know a lot of countries that were trying to attract more money and they didn't succeed. This issue of obligations gives us the comfort that this year we can finance all the expenses that we have in the budget without any problems in the next period," Citu said.

He added that the financing of a budget deficit of almost 7pct of the GDP, without asking for the help of any international institution, represents a first for Romania.

The Ministry of Public Finance (MFP) announced on Wednesday that Romania had attracted 3.3 billion euros from external capital markets at attractive costs in the context of the spread of the COVID-19 pandemic, and the funds related to this transaction entered the Treasury's accounts on 26 May.

The total value of the issue is 3.3 billion euros, the level of final subscription being more than three times higher, with the participation of more than 585 investors.

The issue was carried out in two tranches, of which 1.3 billion euros with a maturity of 5 years, with a yield of 2.793pct and an interest rate of 2.750pct per year and two billion euros with a maturity of 10 years, with a yield of 3.624pct and an interest rate of 3.624pct per year.

As regards the geographical distribution of investors, for the five-year long maturity (with maturity of 26 February 2026), this was the following: the United Kingdom and Ireland 22pct, the USA 14pct, Germany and Austria 15pct, Romania 6pct, EEC 6pct, Switzerland 5pct, Italy 7pct, France 4pct, the rest of Europe 16pct and Asia 5pct.

At the same time, for the maturity of 10 years, the geographical distribution of investors included: the United Kingdom and Ireland - by 35pct, the USA 23pct, Germany and Austria 9pct, Romania 8pct, EEC (excluding Romania) 6pct, Switzerland 5pct, Italy 2pct, France 2pct, the rest of Europe 7pct and Asia 3pct.

The transaction was brokered by BNP Paribas, Erste Group Bank AG, ING Bank N.V., J.P. Morgan Securities Plc., Raiffeisen Bank International AG and Unicredit Bank AG, while Filip & Company Law Firm provided assistance, together with Linklaters Law Firm.

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