Romania Explores Debt Management Options for Upcoming Eurobond Maturities

By Luiza Ilie

BUCHAREST (Reuters) -Romania has concluded its 13 billion euro foreign debt issuance target for this year but does not rule out further issues to switch eurobonds maturing next year, the head of the debt agency, Stefan Nanu, said on Friday.

Romania accessed foreign markets for a third time earlier this month amid strong demand as a package of planned tax hikes averted the risk of a ratings downgrade to below investment grade, ending months of political instability driven by a presidential election canceled in December and re-run in May.

The extended election cycle inflated Romania's budget deficit to the EU's highest level - 9.3% of output in 2024 - but financial assets stabilised by the end of June as the three-week old broad coalition government announced the tax hikes and further plans to cut state spending.

"While we do not need another eurobond issue this year... it is possible that we will consider liability management on foreign markets," Nanu told Reuters.

"There are three eurobond issues which expire next year ... worth 4.25 billion euros ($4.94 billion), we might do a switch."

Nanu also said Romania will seek to issue samurai bonds this year pending market conditions after raising $225 million in a debut green Samurai issue last year.

The finance ministry will raise its funding target for the year - currently at 231 billion lei ($53.04 billion) - as the government's initial budget deficit target of 7% of output is no longer valid, with Prime Minister Ilie Bolojan saying the shortfall would come in at around 8% of output.

"Having already covered about 74% of the initial funding needs for the year, and with a high FX buffer," Nanu said. "We have flexibility and room to adapt once the budget revision shows a higher deficit."

He also said Romanian retail investors could buy 45-50 billion lei ($11.48 billion) worth of bonds this year. Initially a way to offer households a broader range of savings instruments, retail bonds have become an important part of the ministry's funding strategy.

The ministry expects debt to reach 58.1% of output this year based on the 7% deficit target. Nanu said debt will top 60% next year. Brussels expects Romania to lower its deficit to below 3% of output by 2030.

Romania is currently hanging on to the lowest investment grade rating from S&P, Fitch and Moody's with a "negative" outlook.

($1 = 4.3553 lei)

($1 = 0.8589 euros)

($1 = 0.8600 euros)

(Reporting by Luiza Ilie, Editing by Louise Heavens)