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Romania: A time to borrow

The Romanian authorities need to take prompt action to develop capital markets.

Romania’s rocky road to reform


"The ministry of finance has failed to create a local and international market for government paper, which the corporates could build on," says Mihai Florian, vice-president of DCM at Merrill Lynch. "They are very conservative on the accounting side of things and have not driven forward the necessary changes in the capital markets. It can’t happen overnight, but I don’t think they are even putting in the groundwork at the moment."

One government official agrees. "My personal preference would be for local borrowing," he says. "I think that the government has said it might do half local and half internationally as it wants to maintain a reputation in the external environment." The sovereign recently mandated Credit Suisse, EFG and UBS to arrange a €500 million, five-year or 10-year Eurobond issue. But as conditions in the global capital markets continue to be volatile, some analysts doubt that the deal will go ahead, and, if it does, consider that the price will be unfavourable.

The equity market is one area that excites bankers. In 2007, national gas transporter Transgaz launched an IPO worth €64 million, which was oversubscribed 28 times.


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