The state borrowed nearly 1.32 billion euros yesterday, mainly from banks, agreeing to pay a 4.8% interest rate on three-year bonds.
At this price, the Finance Ministry raised more than the planned billion, but not as much as had been discussed at previous meetings with potential investors.
The overall subscription demand amounted to over 2 billion euros, but attracting a higher amount would have also meant a higher interest rate. Out of the total of 1.319 billion euros, banks contributed 1.042 billion euros.
The auction comes amid comments made on Wednesday evening by the managing director of the IMF, Dominique Strauss Kahn, on the prospects of five European countries of defaulting on payments, with Romania being mentioned towards the end of the list. Coincidentally, on Wednesday morning, NBR governor Mugur Isarescu talked at a seminar precisely about Romania's foreign and public debt, saying markets become much more anxious when public debt gets to 40% of GDP, as is the case of Romania, and that Latin American countries went into default with a debt of as little as 20% of GDP. Yesterday, however, he responded harshly to the head of the IMF that Romania's foreign payments were not made by him or by the Fund, but by the government and the NBR. "In my capacity as governor of the NBR, I want to make it very clear that there is absolutely no danger of Romania suspending its foreign payments." At the same time, Isarescu created confusion saying it would be best for the government bonds to be put off after banks had already submitted their offers.
The state borrowed nearly 1.32 billion euros yesterday, mainly from banks, agreeing to pay a 4.8% interest rate on three-year bonds.
At this price, the Finance Ministry raised more than the planned billion, but not as much as had been discussed at previous meetings with potential investors. @N