The cost of government financing has fallen. Nazare: Fiscal discipline is validated by the markets

The Ministry of Finance announced on Friday that the state’s long-term financing cost in lei fell below 7% for the first time this year, representing the lowest borrowing cost since 2025.

The institution states that it has carried out „a successful operation that reduced the risk of refinancing the government’s public debt.”

„The operation consisted of exchanging a series of short-term bonds (government securities) for a new series of long-term bonds, thus moving the payment obligation further into the future.”

The ministry „exchanged bonds maturing on April 22, 2026, and June 24, 2026, for a new series of bonds with a much longer maturity, on April 25, 2035, in the amount of 450.65 million lei. Through this type of operation, carried out every two months, the MF aims to reduce the refinancing risk, which can influence the cost of government borrowing. This action is in line with the objectives set out in the Government Public Debt Management Strategy.”

The Ministry announces that the operation benefited from „robust demand from investors, which reached 836.34 million lei.” Following the auction, the institution allocated the amount of 450 million lei, „managing to obtain a maximum awarded yield of 6.93%. This yield (which represents the cost paid by the state for the loan), although still high, is the lowest obtained this year for a residual maturity of approximately 10 years,” the ministry said.

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Finance Minister Alexandru Nazare said the result confirms the markets’ confidence in Romania and its current fiscal policy:

„This transaction is an important component of our risk management strategy. Achieving a long-term borrowing cost of 6.93%—the lowest level this year, although still high—is not a random event, but proof that fiscal discipline and the commitments made in dialogue with the European Commission are validated by the markets. Through pre-financing and extending the maturity of our debt, we are ensuring that we avoid additional pressure on government costs, transforming investor confidence into concrete and sustainable benefits for the public budget.”

The ministry recalls that „a similar yield was achieved in a government bond issue on November 11, 2024, with values generally higher than 7% recorded during the current year.”

„The Ministry of Finance emphasized that this favorable development is the result of a prudent approach, including the policy of pre-financing (attracting funds in advance) the current year’s needs. With a financing requirement of 259 billion lei, the plan has a 95.3% achievement rate, allowing resources to be secured without putting additional pressure on the state’s financing costs.”

According to the ministry, „the gradual reduction in medium- and long-term financing costs, which fell below 7% for the first time this year, is also supported by improved investor sentiment.”

„This improvement comes in response to the fiscal consolidation measures and public finance adjustments implemented by the government to return to the path agreed with the European Commission, but also due to the confirmation of the investment grade rating by rating agencies,” the statement said.

„The effect of all these measures is reflected in the downward trend in financing costs. Compared to the first half of September this year, there have been reductions of approximately 50-60 basis points (bps) for the entire range of maturities. Similar positive developments are also seen for Eurobonds (government bonds issued in Euro and USD on foreign markets), where the declines are 20-30 bps.”