The government bond that you no longer sell, but pledge

On August 20, the National Bank put into public consultation a project through which government bonds listed on the stock exchange, including Fidelis, will be able to guarantee loans to the population, up to 80% of their market value. The project appears in the year in which the Romanian state has to cover its largest financing need so far, borrows more expensively than Greece and Bulgaria and cannot count on economic growth. The rule does not create a serious leverage opportunity today, because interest rates close it.

It creates a mechanism that becomes attractive when interest rates fall and which, on the day of a market drop, can transform the stable holder of government bonds into a forced seller.

• Why the state needs money

Romania's gross financing requirement for 2026 is about 280 billion lei, the highest ever. It consists of the targeted deficit, 135.7 billion, or 6.2% of gross domestic product, and the rollover of old loans that have reached maturity, around 151 billion.

Public debt exceeded 61.4% of gross domestic product in May, or 1,194 billion lei, compared to 60.2% in April, according to the Ministry of Finance. The increase in a single month was 23 billion. Interest expenditure this year reaches about 61 billion lei, compared to 50 billion last year, or about 3% of gross domestic product.

The price of this money is high.

The yield on Romanian ten-year government bonds was 7.38% at the beginning of May, higher than that of Greece or Bulgaria, although their debt relative to gross domestic product is, in the case of Greece, more than twice as high.

Fitch maintains Romania at BBB minus, with a negative outlook. The economic growth forecast for this year is 0.1%.

Only one observation emerges from these figures. The state needs more money than ever, it gets it more expensively than its neighbors, and the economy from which it is paid is not growing.

• Why the population

In such a situation, any government looks for buyers who do not demand risk premiums and do not leave at the first bad news.

From the state's point of view, the population offers a more stable domestic investor base and is less sensitive to the rapid movements of international capital.

The Fidelis program, with monthly issuance, non-taxable interest and special installments for blood donors, is part of this logic.

The August 7-14 edition offered 7.50% for ten years, 6.90% for four years and 6.30% for two years in lei, and in euros 4.00% for three years and 6.30% for ten years.

Exemption from income tax and health contributions is not a gift, but a price: the state waives taxes to obtain domestic demand.

From August 2020 to August 20, 2026, the 39 Fidelis offers attracted 71.6 billion lei, of which over 9.6 billion this year alone, according to the Bucharest Stock Exchange.

The need has a number and a target.

The target for financing from the population is 60 billion lei in 2026 and 70 billion in 2027, according to the public debt management strategy (cited in the media); about 47 billion were collected from the population in 2025 and 32.7 billion in 2024.

At the end of this year, the population is expected to hold around 100 billion lei of Romania's debt. However, the target is behind schedule: in the first five months of the year, subscriptions through Fidelis and Tezaur amounted to 18.78 billion lei, compared to 22.72 billion in the same period in 2025, and most of the decrease comes from Fidelis.

It should be noted that Fidelis, the program sold on the stock exchange, is the only one to which the new regulation applies, because only securities admitted to trading on a regulated market can be provided as collateral.

From the perspective of state financing, the draft submitted for consultation on August 20 functions as a next step on the same path.

Having made the security attractive to buy, it makes it useful to keep: those who need money no longer have to sell, but can pledge it. For the state, the effect is threefold - the security becomes more attractive upon issuance, the selling pressure on the secondary market decreases, and the population's holdings can increase without increasing savings.

This connection is deduced from the matching of facts, not from a document.

There is no statement linking the National Bank's draft to the Ministry of Finance's need for financing, and the alternative explanation is equally legitimate: a loan secured by government securities presents a lower risk for the lender than an unsecured loan for personal needs, and deserves to be treated differently. BURSA has requested clarification from the National Bank and the Ministry of Finance on the initiative for the amendment and on the consultation between the two institutions.

The National Bank's spokerperson Dan Suciu, indicated that, once it enters into public debate, the project is subject to consultation with all interested parties, including the Ministry of Finance and the banks, and the final form will depend on these discussions: "we will see how we close it".

Who requested the modification remains, for now, unsaid.

A clarification that corrects the usual impression: the most obvious beneficiary is not the small saver, but the holder with a large portfolio, including the private banking client, who wants large loans, which the current rules do not allow.

• Three scenarios

The decisive unknown is missing: it is not known how much such a loan will cost, because the product does not yet exist.

All that follows are scenarios built on the margin that the bank would add on top of the consumer credit benchmark, currently 5.56%.

Two situations must be distinguished from the beginning, because the project treats them differently.

When the securities are purchased from the credit they guarantee, the ceiling decreases by at least ten percentage points, so the ratio between credit and guarantee is at most 70%; this is the case of indebtedness for the purchase of the security and it is analyzed in the first two scenarios.

When the credit is taken with securities already held, that is, to obtain money without selling, the ceiling remains 80%; this is the case analyzed in the third scenario.

1. The first scenario, at today's interest rates

At a margin of one and a half points, the credit costs 7.06%, compared to a security that brings 7.50% non-taxable. At 100 lei of securities, of which 70 credit and 30 own money, the coupon brings 7.50 lei, the interest takes 4.94 lei, and the remaining 2.56 lei means 8.53% on own money. Without debt, the same money would have yielded 7.50%. The whole construction therefore adds one point per year. An increase of a single percentage point is difficult to justify economically in relation to the interest rate risk assumed over ten years and the daily revaluation of the guarantee.

At a margin of two and a half points, the loan costs 8.06%, and the return on one's own money drops to 6.19%, i.e. below the 7.50% obtained by remaining quiet. In this case, debt becomes counterproductive. Add inflation: at 10.42% in June, the 7.50% coupon is now negative in real terms.

2. The second scenario, at lower interest rates

The bond's coupon is fixed, the loan interest is not. If the benchmark falls to 4.50% and the spread remains at one and a half points, the loan costs 6.00% and the return on equity rises to 11%, compared to 7.50% without debt. The gain brought by debt is three and a half points. Analysts expect interest rate cuts to start in the last quarter of this year or in 2027. The regulation therefore has little economic significance today; it will gain it if interest rates fall.

3. The third scenario, at higher yields, concerns the liquidity loan secured by securities already held, where the ceiling is 80%.

A ten-year security with a 7.50% coupon loses 6.6% of its price for a one-point increase in yield and 18% for a three-point increase. Two thresholds must be distinguished.

The market value of the collateral drops to the value of the loan only when the yield increases by about 3.4 points.

However, the prudential limit of 80% is exceeded from the first price drop: with a loan granted right at the ceiling, any decrease in the price of the security pushes it over the limit.

How quickly yields can move was seen in May 2025. After the first round of the presidential elections, on May 4, the yield on Romanian ten-year bonds rose to 8.00% in two days, by half a point, Reuters reported on May 6, and the leu then crossed the threshold of five lei for one euro for the first time. In two weeks, the yield went from 7.52% on April 28 to over 8.5% on May 8 and 9, the highest level since November 2022.

What matters less is the amplitude and more is the speed: half a point in two days erases about three percent of the price of a ten-year security, and for a loan granted at the ceiling, the excess is found on the next day's revaluation, because the project requires that the guarantee be revalued daily.

• The consequences

The most important thing follows from the third scenario.

A loop of public indebtedness works in the same direction as the market: it adds demand for government securities when it is quiet and can add supply when yields rise, because the decrease in the price of the guarantee can lead, as the contracts will be written, to the request to supplement the guarantee, to a reduction in the credit or to the sale of the securities.

The state could gain additional buyers in good years and additional sellers precisely on the days when it needs buyers the most.

The National Bank's project does not impose such automatism.

It requires daily revaluation of the collateral, but leaves the evaluation methodology and the conditions of capitalization to the lenders. That is why the consequence cannot be found in the regulation, but only in the contracts that banks will write them, and this is one more reason for them to be regulated now, not found out later.

The individual holder is generally less prepared to manage this risk than an institutional investor.

He does not have simple means of hedging against interest rate risk at hand and has bought an instrument that was presented to him as safe, which is the case if he holds it until maturity, but it is no longer the case if he pledged it.

The project also allows exceeding the maximum debt level precisely for these loans, that is, it raises the prudential ceiling for the only category with daily revalued collateral, and allows the interest on the pledged security to be calculated on the repayment capacity.

The possible size of the phenomenon is not published by anyone.

The 71.6 billion lei attracted through the 39 Fidelis offers in 2020 are cumulative issues, and some of the securities have reached maturity and no longer exist; this year alone, 6.9 billion lei of Fidelis will mature. The figure that should be known is the balance of securities still in circulation. It can be calculated, because each issue is listed on the Bucharest Stock Exchange with its value and maturity, but neither the Ministry of Finance nor the Exchange publishes it in total.

Without it, it is impossible to say how much collateral would actually fall under the new regulation.

• What the public can ask for in the consultation

The deadline for submitting observations is September 2, 2026, so there are a few days left. The project is in the Legislative Projects section of the National Bank's website, and observations are sent in writing, according to the instructions in the announcement. They can be checked later in the final form of the regulation, published in the Official Gazette.

Five requests are concrete and can be supported:

1. Publication of a ceiling on the total volume of these loans, at the level of the banking system.

2. Monthly reporting to the National Bank, not quarterly, because a three-month report arrives after the risk has occurred.

3. The lender's obligation to show in the contract, in figures, at what decrease in the price of the guarantee it is required to be supplemented and what happens if it is not supplemented.

4. Waiver of the permission to exceed the maximum debt ratio for loans with daily revalued guarantee.

5. Publication, in the substantiation note, of the initiator of the change.

None of these requests oppose the idea of using government securities as collateral, which is reasonable in itself and exists in other countries.

All of them concern the extent to which the risk remaining with the individual holder is seen, counted and limited.