There are differences between prices primary dealers ask for T-bills and the ones that can be accepted by the Finance Ministry, but we are trying to stick to the initially-announced issue calendar, believes Stefan Nanu, general manager of the Treasury.
"There's a problem about reaching a consensus about reasonable yields. Lately, we've agreed to borrow from the domestic market at costs that were probably unjustified in terms of inflation targets, but a policy of adaptation to the market is necessary. Some principles cannot be relinquished. No Treasury of a developed country freezes T-bills issues when the market moves up or down," stated Nanu.
He considers yields of 10.5%-10.75% for T-bills are high enough against an NBR interest rate of 9.75%, given that they also carry a sovereign risk.
Nanu considers the Treasury is considering reassessing possibilities to restructure the foreign debt portfolio in the context where there is a high number of contracts in progress, more than half of this debt is contracted at variable interest rates and just a quarter is tradable.
He maintains an element of inefficiency is related to the high number of contracts in progress. At the same time, another vulnerable element is the fact that a large part of the debt (60%) is contracted at variable interest rates. On the other hand, he explains that should a large part of debt be contracted at fixed interest rates, there would not be a competitive edge.
The Treasury's basic goals are reducing foreign exchange risks, developing the T-bills market and raising the yield curb, but also getting some cost advantages.
Nanu says since 2000 the Treasury has coped with a problem of financing policy inconstancy and with high fluctuations in the volume of T-bill issues.
"This year, issues were normal, but at the lower limit, as the level of costs was very high. In terms of maturity terms, we chose the short term," said the general manager of the Treasury.
So far, T-bills worth around 4 billion RON have been issued, with the calendar for the entire year pointing to 11 billion RON.
Nanu said 10-year government securities could also be issued toward yearend should inflation go down and the NBR cut its benchmark rate.
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