"Buy some for me at 40% of the nominal value." That''s what one investor was telling a broker of financial instrument transactions. However, the issue is not about an investor and a broker on the Bucharest Stock Exchange, but about the order sent to a broker on the market for par value securities issued by the Finance Ministry.
The market of nominal value securities has turned into the Romanian capital market''s third segment over the last few months, coming after the stock and bonds market, though these particular securities are not traded on the Stock Exchange, but over the phone and later through the contracts signed at notary offices, while quotes are most often published in the classified sections.
The Finance Ministry has issued these securities against the reparations the state owes to those whose property was seized by force between 1945 and 1989. The market for these instruments is approaching 100 million euros and comprises over 3,500 players - approximately two thirds of the monthly number of equity investors on the Bucharest Stock Exchange.
The existence of this segment of the market is coming to end, however, now that the new property regulations endorsed by the Government through an emergency ordinance at the end of last week no longer allow the sale of such securities, which came at a time when the market had just started to move. The new regulations are due to come into force in a matter of days. These regulations stipulate that any par value securities unused in the privatisation process will turn into "reimbursement certificates". It will not be possible to sell the latter and they will only be used for subscription to the "Property Fund" that will be made up of minority stakes in various companies.
The Finance Ministry is still issuing par value securities for people whose property was nationalised, and the value to be reached by the market of reimbursement certificates is hard to specify.
"The Finance Ministry has no information as to the value of the certificates that are to be issued because the holder institutions keep issuing retrocession decisions by means of par value securities," Finance Ministry officials say.
The figures circulating on the market in connection with the value of the securities the Finance Ministry plans to issue indicate a value of several billion euros.
Like the Bucharest Stock Exchange, these securities have seen heavy fluctuations over recent months, depending on the uncertainty of the market and the buyers'' hopes for future gains.
The prices at which the transactions are concluded are expressed as a percentage of the value printed on the securities, and the prices mainly do not exceed half the par value of the securities - that is, of the level of compensation their holders are entitled to from the state.
"These securities were trading at some 65% of their par value in January before the price fell to 25% in April. The decline was caused by the legislative ambiguities. The price then rose again and is now at 45-55% of the par value," said Bogdan Tomosoiu, head of a financial consulting firm, who himself bought par value securities both for himself and some of his clients.
vlad.nicolaescu@zf.ro
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