Updated December 29th, 2023 at 22:44 IST
Romania to lower net Eurobond issuance in 2024, plans green bonds
Debt managers expect Romania's gross funding needs to fall by roughly 11% to 181 bn lei.
The net eurobond issuance of Romania will fall to no more than 6 billion euros ($6.64 billion) in 2024 from 9.5 billion this year, and the country plans to continue front-loading both domestic and foreign borrowing pending market demand, the treasury chief said on Friday. Debt managers expect Romania's gross funding needs to fall by roughly 11 per cent to 181 billion lei ($40.23 billion) in 2024, driven by a lower fiscal deficit target, with domestic issuance expected to account for most of it.
Stefan Nanu told Reuters in an interview the framework needed to issue green bonds would probably get approved by the government in January, with the first issue, either in the leu currency or in euros, expected in the first half. While the first green eurobond would be at least benchmark-sized at around 1 billion euros, Nanu said future issues would not be very large to allow Romania "retain the capacity of being a frequent annual green issuer."
He also said preliminary discussions with offshore and domestic buyers showed strong appetite for Romanian green bonds. The European Union member also plans to debut a Samurai bond in the first half, to diversify its pool of investors, with at least one tranche offered through the new green framework. Romania raised its funding target for 2023 twice, arriving at 203 billion lei after 160 billion lei initially, to accommodate a larger than expected budget deficit and pre-fund some of its 2024 needs. Next year, Nanu said Romania could reduce its funding buffer in the event its financing needs exceeded expectations. It aims to lower its fiscal deficit to 5.0 per cent of gross domestic product from an estimated 5.9 per cent this year, a reduction analysts say could prove challenging in a year when Romania will hold local, parliamentary, presidential and European elections.
While rate cut expectations were supporting bond markets globally, Nanu said Romania offered strong return potential compared with regional peers where policymakers have begun cutting interest rates, whereas Romanian's first rate cut is expected in the first half of 2024. "In a regional context Romania's returns look good," Nanu said, provided the growth outlook and access to EU funds evolved as expected. Major rating agencies have assigned Romania their lowest investment grades with a stable outlook. ($1 = 0.9038 euros)
(With Reuters inputs)
Published December 29th, 2023 at 22:44 IST