In a move to support the development of Romania’s capital markets, the EBRD has launched a €150 million programme to back medium- to long-term bonds issued by the country’s financial institutions.
The Bank’s first investment under this framework has been made in an inaugural local currency bond issued by UniCredit Tiriac Bank. The EBRD subscribed 20 per cent of the Romanian bank’s RON 550 million (€121 million equivalent) five-year unsecured issue, which attracted over 30 investors.
Domestic institutional investors subscribed to over half of the bond’s volume.
The EBRD’s Financial Institutions Bond Market Framework for Romania covers investments in negotiable debt securities issued by local banks and non-bank financial institutions.
This type of financing is aimed at enabling financial intermediaries to diversify their funding sources and ensure a better match between their assets and liabilities.
The Framework will contribute to overcoming barriers hindering the development of the corporate bond market in Romania by fostering successful non-sovereign bonds and encouraging issues that are large enough to be liquid and attract institutional investors.
“We are pleased to support UniCredit Tiriac Bank’s first local currency bond issue and one of the first bond issues by a commercial bank in Romania since the onset of the crisis,” said Nick Tesseyman, EBRD Managing Director for Financial Institutions.
“We believe that this will pave the way for other financial institutions to access bond markets for financing, thus contributing to the development of the local capital market in Romania, while this new framework for Romania will allow the EBRD to join forces with local financial partners in supporting their bond issues,” he added.
Rasvan Radu, CEO of UniCredit Tiriac Bank, said: “We welcome the EBRD's investment in our premier bond issuance, which shows commitment to our institution, the Romanian capital market and the economy as a whole.
The involvement of international financial institutions, such as the EBRD, and the fact that our offering was oversubscribed in challenging market conditions, proves the good potential of the corporate bond segment in Romania."
The new framework is in line with the Local Currency and Local Capital Markets Development Initiative launched by the EBRD in May 2010 with the aim of supporting reforms and policies in the Bank’s countries of operations that encourage increased use of local currency as well as the development of local capital markets.
The €150 million programme comes under the Joint IFI Action Plan for Growth in Central and South Eastern Europe launched in November 2012 by the EBRD, the European Investment Bank Group (EIB Group) and the World Bank Group. The plan is a direct response to the continuing impact of eurozone problems on the economies of emerging Europe and includes total commitments of €30 billion over two years.