Higher preference for euro-denominated securities in the Fidelis offer

Investors have a higher preference for the euro-denominated Fidelis government securities from the current offer launched by the Ministry of Finance, which until yesterday at 14:00 had accumulated subscriptions of 53.8 million euros, according to our calculations based on data extracted from the platform of a brokerage house.

The lei-denominated securities, for which investors had launched purchase orders worth 91.7 million lei (18.1 million euros), include four tranches. The one with a two-year maturity and an interest rate of 7.2% per annum had collected subscriptions of 50.9 million lei, while the tranche with a four-year maturity and an interest rate of 7.65% had purchase orders of 9.3 million lei. The tranche with a maturity of six years and an interest rate of 7.9% had accumulated subscriptions of 13.1 million lei.

For the blood donors tranche with a maturity of two years and an interest rate of 8.2%, the value of purchase orders amounted to 18.4 million lei. Within this tranche, people who have donated blood starting with March 1, 2024 can subscribe.

The euro-denominated securities are also made up of four tranches. The one with a maturity of two years and an interest rate of 3.1% per annum had collected subscriptions of 4.6 million euros, while the tranche with a maturity of five years and an interest rate of 5.25% had purchase orders of 6.5 million euros. The tranche with a maturity of ten years and an interest rate of 6.5% had accumulated subscriptions of 23.7 million euros - the highest value of all tranches regardless of currency. For the blood donor tranche with a maturity of two years and an interest rate of 4.1%, the value of the purchase orders amounted to 9.2 million euros.

Overall, two-thirds of all subscriptions were made in euros.

The offer is taking place at a time when inflation in our country is well above the central bank's long-term target, while analysts' estimates are that the Government's first fiscal package, which will be implemented to correct the budget deficit, will have an inflationary impact. In June, inflation amounted to 5.7%, in annual dynamics, higher than that of May, of 5.4%, being thus more than double the NBR target of 2.5%. For the eurozone, the latest estimates from the European Central Bank indicate inflation of 2% this year, which will fall to 1.6% in 2026 before returning to 2% in 2027.

The nominal value of a Fidelis title is 100 lei, respectively 100 euros, and the titles will be listed on the Bucharest Stock Exchange. Donor-investors enjoy a minimum subscription threshold reduced from 5,000 lei to 500 lei, within a maximum ceiling of 100,000 lei, while for euro-denominated titles the minimum subscription threshold is 100 euros for donors, reduced from 1,000 euros, within a maximum ceiling of 20,000 euros.

The offer, which began on August 1, will end on Friday, August 8.

Through the latest Fidelis government bond offering, the Ministry of Finance attracted 1.65 billion lei (681.3 million lei and 192 million euros respectively) from the population. During the Fidelis government bond subscription process, intermediaries do not charge commissions. The income obtained, both from interest and capital gains, is non-taxable, while the listing on the BVB offers investors the possibility to sell them before maturity and collect the interest related to the holding period.