The yield on Romanian government bonds - both domestic and foreign issues - fell sharply yesterday, falling by between 4 and 11 basis points depending on maturity, following the decision by “Moody's“ to keep Romania's credit rating in the “investment grade“ category, said Acting Finance Minister Alexandru Nazare, quoted by BTA by Agerpres.
Nazare wrote that “Moody's“ confirmed Romania's rating, keeping our country in the investment grade category“. He noted that before the announcement, the markets had been cautious: “While the yield on 10-year bonds in other countries of the region was down by 10-20 basis points, Romania was an exception, as investors awaited the decision of “Moody“ . After the rating confirmation, he said, “the market reaction was favorable“, with yields falling on August 10 compared to Friday's close.
Nazare also noted the strong demand at the August 10 government bond auction, where investors showed interest in buying securities worth 2.6 times the amount the Ministry of Finance planned to raise. The total amount of bids reached 1.79 billion lei compared to the initially announced 700 million lei.
“The high demand shows increased investor interest in Romanian government bonds“, said the Romanian finance minister, adding that the bids were at competitive yields, lower than the secondary market levels, which allowed the ministry to place an issue worth 809.25 million lei at the same yield. He described the reaction as a “positive signal of investors' confidence in Romania's ability to provide financing“, adding: “Romania deserves our full trust. I am convinced that with a balanced approach and responsibility we can not only maintain the current credit rating, but also return to a “stable“ outlook.
In the last two weeks, both “Fitch Ratings“ and “Moody's“ have maintained the “investment grade“ category for Romania, maintaining the BBB- and Baa3 ratings, respectively, with a negative outlook.