BUCHAREST (Reuters) -Romania will raise 2 billion euros ($2.15 billion) from its first ever green bond launched on Thursday, Refinitiv and IFR data showed, as the country seeks to diversify its investor base and tap into growing demand for environmentally focused debt.
Pricing for the long-awaited eurobond, which is due Feb. 22, 2036, was launched at 300 basis points over mid-swaps, some 45 basis points tighter than initial guidance. Bids exceeded 10 billion euros.
Romania will also raise 2 billion euros from a conventional 2031 eurobond, with bids totalling 6.5 billion euros, the data showed.
Bucharest 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, still sharply above the EU’s 3% ceiling.
“Whilst we think Romania is still cheap, especially in EUR, our view is that this issuance is coming too tight at IPT (initial price thoughts) to offer value versus the existing bonds,” Morgan Stanley said in a research note on Thursday, noting outright spreads still offered value for the rating.
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.
($1 = 0.9290 euros)
(Reporting by Luiza Ilie; Editing by Susan Fenton)
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