Debt: Local Over External

January 2005 | Market Strategy

For the last six weeks, the convergence trade has paused for the Romanian EUR 12, which is trading around 64bps+bunds. Compression towards the 20bps+bunds area in which first wave paper is trading is likely to be slower going forward. Indeed, the credit is already looking quite rich and a premium over Bulgarian paper is likely to persist for now. Romania only enjoys one investment grade rating to Bulgaria's two, and the likelihood the safeguard clause in the EU accession agreements is much higher in the case of Romania. Thus, with the leu in an appreciating trend, we prefer local over

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