Investors romance Romania
Foreign buyers are attracted by news of an export-led recovery and privatizations. Getting them hitched for the long term, however, will require a boost in local macroeconomic demand, including dealing with banks’ residual bad debts.
When it comes to attracting the attention of international investors, Romania has for many years been the wallflower of emerging Europe. Despite an economy and population second in size only to Poland among the EU transition countries, Romania’s vulnerability to external shocks, underdeveloped capital markets and reputation for political and financial unreliability have tended to deter all but the most enthusiastic fund managers.
Events of the past 12 months suggest global investors are finally waking up to Romania’s charms. In the equity markets, the long-awaited resumption of the government’s promised privatization programme received a warm welcome from the international investment community. External buyers took around two-thirds of each of April’s secondary offering of a L322 million ($96 million) stake in pipeline operator Transgaz, a L282 million IPO of Nuclearelectrica in September, and November’s L1.7 billion IPO of natural gas producer Romgaz, Romania’s largest-ever IPO.
Meanwhile, Romania’s regular visits to the international bond markets since the start of 2012 and the impressive performance of its Eurobonds – combined with the inclusion of its domestic sovereign debt in both Barclays’ and JPMorgan’s emerging market indices for the first time in March – prompted a growing number of bond investors to explore the local-currency market.