Romania sets euro bond guidance

BUCHAREST: Romania opened the books on Thursday on a euro-denominated five-year benchmark bond, setting guidance at 260 basis points over mid-swaps, Thomson Reuters news and market analysis service IFR said.

Romanian debt managers have said they plan to sell between 500 million euros and 1.5 billion euros in euro medium-term notes (EMTNs) in the first issue of a three-year programme worth 7 billion euros.

Romania faces a debt repayment bill of some 2.5 billion euros in July and this will be the first time it has tapped foreign markets since March 2010, when it sold 1 billion euros worth of five-year Eurobonds at 5.17 percent.

Since then, the centrist coalition government has enforced painful public sector pay cuts and raised value added tax to keep a lid on its fiscal deficit in compliance with a since expired 20 billion euro aid deal led by the International Monetary Fund.

Analysts said they expected the EMTNs to attract hefty demand as emerging European euro debt is attractive compared with the euro zone periphery, but some also said Romania could have fetched a better price earlier in the year, before the ECB raised interest rates.

"So far, interest in the issue is good," a banking source close to the deal told Reuters.

A trader said the shadow book so far was at 1.5 billion euros. "The price looks good for investors, let's see if demand rises," he said.

Elsewhere in the region, Hungary, which also went to the IMF for aid during the financial crisis, sold 7-year euro-denominated bonds worth one billion euros in May, priced at 270 basis points over mid-swaps.

Romania's leu was steady against the euro on the day, trading at 4.1615 at 1307 GMT.

Fitch Ratings and Standard & Poor's both rate Romania below investment grade at 'BB+', with a stable outlook. Moody's rates it above junk at 'Baa3' with a stable outlook.

Copyright Reuters, 2011