The confirmation of Romania's rating by S&P, following similar decisions by Fitch and Moody's, is sending positive signals to the markets; government bond yields fell by 10-20 basis points on Monday, depending on maturity, announced interim Finance Minister Alexandru Nazare.

'Positive signals in the markets today. The rating confirmation by S&P, following Fitch and Moody's, despite a prolonged climate of political uncertainty, demonstrates the importance of maintaining the rating for preserving investor confidence and reducing the country's financing costs,' Nazare wrote on his Facebook page.

According to the minister, the yield curve shifted downward on Monday compared to Friday's close across all maturities, with drops of 10-20 basis points; medium- and long-term bonds saw the most significant adjustments.

Additionally, at the tender to reopen a benchmark bond issue maturing in nearly two years, the Ministry of Finance recorded demand of 1.25 billion lei against an offer of 500 million lei. The Ministry awarded 532 million lei at a yield of 6.98%, below the secondary market level, according to Nazare.

'This is a concrete signal that the reduction in perceived risk regarding Romania can translate into lower financing costs. However, we should not judge success based on a single market session. Our goal is for this trend to become structural and to see Romania's entire yield curve shift downwards over time,' the minister stated.

He emphasized that the drop in yields and higher demand at the auction indicate increased investor interest in Romanian government securities, allowing the state to borrow at lower costs.

'Solid budget execution and maintaining the deficit reduction trajectory were crucial for preserving the credit rating. However, the outlook remains negative, so the risk has not disappeared,' Nazare noted.

In his view, the next test is the 2027 budget and Romania's ability to demonstrate that fiscal adjustment continues beyond temporary measures.

The finance minister pointed out that lowering financing costs is one of the institution's major objectives, aimed at limiting interest expenses and improving public debt sustainability.

At the same time, Nazare highlighted the growth of the local investor base. Private pension funds hold approximately 30% of the government securities issued on the interbank market, an increase of about six percentage points, while the general public holds around 80 billion lei in government securities through the Tezaur and Fidelis programs.

At the same time, holdings by non-resident investors have fallen to approximately 17%, the lowest level in five years, according to the minister.

'Developing the domestic government securities market is, for this reason, a component of Romania's financial security. We want more investors, better-distributed maturities, and reduced dependence on episodes of external volatility,' emphasized Alexandru Nazare.

He noted that the objectives for the coming period include stabilizing the rating outlook, reducing financing costs, and developing a more robust local government securities market.

On Friday, the credit rating agency Standard & Poor's (S&P) affirmed Romania's sovereign rating at BBB-/A-3 (investment grade) and maintained the negative outlook, reflecting S&P's view that implementation risks regarding the consolidation of Romania's public finances and the reduction of its external deficits remain high. AGERPRES(RO - writing by: George Banciulea; EN - writing by: Bogdan Gabaroi)

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