Having narrowly passed the Fitch rating, the next test is Moody’s

  Romania’s long-term sovereign bond yields have fallen slightly after the publication of the report through which the international financial evaluation agency Fitch Ratings confirmed, with some reserve, the sovereign rating for Romania at BBB-, the last investment-grade.   At the same time, the short- and medium-term interest rates have not fluctuated significantly in the context where on Friday, 7th August, after the US financial markets have closed, there is another evaluation for Romania, on the part of Moody’s.   RO10Y, Romania’s 10-year government bond yield – which serves as a benchmark both for the cost of borrowing in the economy and for international investors’ appetite and outlook regarding Romania – fell to 6.82 per cent from levels close to 7 per cent last week.   At the same time, the short-term interest rates remained at the levels at which they closed last week: 2-year interest rate was traded on Monday at 6.42% while 3-year interest rate was on Monday, at 12:30, at 6.63%.   An unusual aspect of Fitch’s report confirming Romania’s investment-grade rating and the associated negative outlook is the mention that the final decision was amended following an appeal lodged by the Romanian authorities.   The agency states that, “in accordance with Fitch’s policies, the issuer (the Romanian Government) lodged an appeal and provided additional information, which led to a rating decision different from that initially adopted by the rating committee”. However, Fitch does not specify what the initial decision was, nor what the change entailed.   Moreover, in a Facebook post, Finance Minister Alexandru Nazare stated that “Romania remains in the investment-grade category – another test passed by the narrowest of margins.”   Nor is the international rating agency Moody’s expected to downgrade Romania’s sovereign rating to ‘junk’ status, which is not recommended for investment.   On Friday, after the US financial markets close, Moody’s is due to announce a new rating decision and a review of the outlook for Romania.