Romania starts selling its debut green bond

By Thomson Reuters Feb 15, 2024 | 6:12 AM

BUCHAREST (Reuters) – Romania launched its first ever green bond on Thursday, Refinitiv news and market analysis service IFR said, in a long-awaited move designed to diversify its investor base and tap into the growing demand for environmentally-focused debt.

Guidance was for the 12-year eurobond to pay a spread of 345 basis points over mid-swaps, with pricing expected later on Thursday. Romania is also selling a conventional 2031 eurobond, with bids for the two issues exceeding 10 billion euros ($10.73 billion).

Romania has spent more than a year preparing the framework needed to issue green bonds and treasury chief Stefan Nanu told Reuters in December the country planned its first benchmark-sized issue in the first half of 2024.

He also said the European Union member planned on being a frequent annual green issuer and would seek to keep issues on the small side.

Green bonds fund expenditures beneficial to the environment and governments across Europe have launched sizable issues.

Romania, which already has a slate of renewable energy projects lined up for EU funding, will use its green debt framework to fund green transport links, buildings’ energy efficiency and reforestation plans among others.

Debt managers plan to lower this year’s net eurobond issuance to no more than 6 billion euros, from 9.5 billion in 2023. The government, which faces local, parliamentary, presidential and European elections this year, also aims to lower its budget deficit to 5.0% of gross domestic product from 5.7% of GDP last year but still significantly above an EU ceiling of 3.0%.

Debt managers sold significantly more Romanian government debt than planned in January, including a dual $4 billion issue of 2029 and 2034 eurobonds, taking advantage of strong demand across Europe, driven by expectations of hefty interest rate cuts this year and high government funding needs.

All rating agencies have Romania at their lowest investment grades with a stable outlook.

Romania hired Citi, HSBC, Erste Group, JP Morgan and Societe Generale for the issues on Thursday.

($1 = 0.9316 euros)

(Reporting by Luiza Ilie; Editing by Susan Fenton)