December 4 (SeeNews) - Austria's Erste Group said on Monday it expects that Romania will continue to issue Eurobonds next year.
Romania's public debt will stay below 37% of GDP and well below the level set by the Maastricht criteria in the coming quarters, the Erste Group said in a CEE public debt research paper.
"With local yields on the rise, the finance ministry will most likely keep a close eye on debt refunding costs and will seek to tap international markets for 1-2 billion euro ($1.18-2.4 billion) in the first half of 2018 before a Eurobond issue worth 1.5 billion euro comes due next June," Erste said.
The proposed overhaul of the welfare system that enters into force in 2018 will certainly improve tax collection, but not enough to completely remove the prospects of a small fiscal slippage, the Austrian lender said.
However, no matter how tempting a higher yield environment would look, investors will most likely balance it against the local risks, especially if the government fails to come up with a set of clear cut measures aimed at putting public finances back on a consolidation path.
Under these circumstances, non-residents will probably hold no more than 17-18% of the domestic part of the public debt, while residents will continue to cover the balance, Erste concluded.
Year-to-date, the ministry has sold some 38.5 billion lei and 340 million euro worth of government bills and bonds and has tapped foreign markets for 2.75 billion euro of 2027 and 2035 Eurobonds.
Romania closed in October its external financing plan for the current year.
In June, the ministry said it plans to sell 7.5 billion euro worth of Eurobonds on international markets in 2018 and 2019.
($=0.8441 euro)