Preference for short-term government bonds from Fidelis' offer

Investors are showing a preference for government bonds with short maturities, within the Fidelis offering that is taking place during this period, marked by the approaching presidential elections, which will take place at the end of this week.

The offering, which began at the end of last week and will end on Friday, May 16, is structured in six tranches, four in lei and two in euros. The lei-denominated bonds, with a maturity of one year and an interest rate of 6.75% per annum, had collected subscriptions of 145 million lei, until yesterday in the second part of the program in which investors could launch purchase offers, while the tranche with a maturity of three years and an interest rate of 7.4%, had subscriptions of 17.5 million lei. The tranche with a maturity of five years and an interest rate of 7.8% had accumulated subscriptions of 15.2 million lei, according to data accumulated by us from the platform of a brokerage house.

For the tranche for blood donors with a maturity of one year and an interest rate of 7.75%, the value of purchase orders amounted to 16.1 million lei. Within this tranche, persons who provide proof of donation starting with November 1, 2024 can subscribe, the maximum subscription being 100,000 lei.

It is worth mentioning that, in the secondary market, there are Fidelis government bonds for which yields have reached 10%, given that there is an inverse relationship between the price of a government bond and its yield.

The euro tranches have maturities of two and seven years, with annual interest rates of 3.85% and 6.25%, with subscriptions amounting to 20.7 million euros (105.7 million lei) and 13.6 million euros (69.5 million lei), by yesterday in the second part of the stock exchange session.

For both tranches, total subscriptions amounted to about 370 million lei, almost two days after the start of the period in which investors can buy Fidelis government bonds this month, which will end at the end of this week.

The offer takes place in a context of inflation above the central banks' long-term target, set between 2% and 2.5%. In Romania, the National Bank estimates inflation at 5.3% for the second quarter, which is expected to fall to 3.1% in the fourth quarter of 2026, a forecast that does not take into account recent political developments. At the European Union level, the European Central Bank estimates inflation at 2.3% this year, with a decrease to 1.9% in 2026 and 2% in 2027.

The minimum subscription value is 1,000 euros for tranches in euros and 5,000 lei for those in lei, respectively 500 lei in the case of blood donors.

In the process of subscribing to Fidelis government securities, intermediary banks do not charge commissions. Income obtained, both from interest and capital gains, is non-taxable. The securities will be listed on the Bucharest Stock Exchange, offering investors the opportunity to sell them before maturity and collect interest for the holding period.

In the previous offering, held in March, the Ministry of Finance attracted 1.3 billion lei from investors. According to the Ministry of Finance, the advantages of Fidelis securities include: the possibility of selling them before maturity with the collection of the associated interest, special tranches for blood donors (with an interest rate one percentage point above the standard one) and diversification of maturities for issues in lei and euros.