Romania Central Bank Bond Buying Paves Way for More Debt Supply

Romania’s central bank bought bonds on the secondary market this week, triggering a rally in the country’s government debt and prompting the cabinet to sell more debt than planned at domestic auctions.

The bank purchased about 150m lei ($36 million) of local-currency government bonds from commercial lenders on Monday and Tuesday in an attempt to rein in a spike in yields since mid-February, according to four people with knowledge of the transactions, who asked not to be identified because they’re not authorized to speak about it.

It was active for the first time since August, buying notes due July 2025 and January 2028, among others, the people said. Romanian bonds outperformed other local-currency debt from central and east Europe this week, with the yield on the country’s 2031 leu-denominated note, the most liquid Romanian bond, falling 38 basis points since Friday.

A central bank spokesperson declined to comment when reached by Bloomberg News by phone.

The central bank’s presence on the market helped reduce financing costs across the Romanian yield curve, allowing the Finance Ministry to borrow a total of 834 million lei via 11-month bills and bonds due 2024 at auctions on Thursday. That’s more than the 800 million lei offered for sale. The ministry had rejected all bids at an auction of bonds maturing in 2026 on Monday, citing “unacceptable price offers.”

The buoyant mood comes as the European Central Bank propped up bond markets by pledging to accelerate purchases under its emergency stimulus plan. Neighboring Hungary also sold more debt than planned at an auction, helped by the Budapest-based central bank’s pledge to expand its quantitative-easing plan earlier this week.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.