The average yield of 4.06% seems to be slightly above the yield curve as defined by past issues* – but it is notable that the Treasury returned to the market after two failed attempts in early February.
Earlier this month, the Treasury postponed a 12-month issue invoking inappropriate conditions on the money market. Later on Feb 10 it failed to issue any funds under a planned 88-month issue**.
The central bank explained meanwhile that the local currency's strengthening and the rise in money market interest rates was caused by the reversal of past foreign currency purchases from the finance ministry in January [namely by the sale of euro on the forex market, which explained the local currency's strengthening against regional trends in early February, as well as the return to what the central bank named as a normal interest rate on money market].
The demand for the 40-month issue was not particularly strong – only RON 1,060mn, but the issue was still oversubscribed. Headline inflation is projected by the central bank to reach 3.5% y/y at the end of this year and remain in the 1.5-3.5% target interval in the coming years.
* 2.03% yield for 12-month bills on
** Auctions for issues are organised one working day ahead of actual issuance date, thus this particular issue was auctioned on Friday, Feb 7.
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