About three quarters of the three-year dollar-denominated bonds released by the Finance Ministry on Wednesday remained unsold because many banks bid unacceptable yields as far as the State was concerned.
The Finance Ministry sold $55 million's worth in bonds out of the $200 million total, for a 4.5% yield.
The rate accepted by the Finance Ministry can be deemed as a signal for the market in view of the issues to come.
Most of the players had, after all, estimated this would be the right price, considering the yield of the Romanian eurobonds, with all the necessary adjustments (4.8% for the issue due in 2005). Some questions remain unanswered, though: why did the Finance Ministry choose to borrow dollars at this particular moment when interests have hit all-time lows on the international markets and why did the issue come out on such short notice?
Demand from the banks amounted to nearly $370 million but some players preferred to bid very high interests, 7% or 8%, just to avoid having to buy the minimum 10%, as all the primary dealers are bound by regulations to do. There were some clients of the banks willing to buy for less than 4.5%, though.
"It's hard to make people buy for three years as long as one does not have a liquid market for such securities. One would rather invest in eurobonds that can be sold anytime. On top of that, the date of the issue and the maturity of the bonds released last year did not overlap; if that were so, people might have bought some," a dealer commented. The first issue (about $100 million) released last year matures as early as next week, on April 17. The Finance Ministry has another $300 million to repay next month. The banks are complaining that advertising the issue only five days before the actual release (of which only three were business days) left them very little time for distribution, so that only a handful of non-resident clients could be notified.
razvan.voican@zf.ro
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