Transelectrica bonds, launched on trading Thursday, January 16, was one of the fastest ways to finance the national system transport operator of power. Although the money markets, more relaxed lately both in the West and in Romania, would rather see investors turn to bank loans, bankers rigidity in granting them comes in counterbalance and gives priority to funding from capital markets, says Sergiu Manea, Executive Vicepresident for Romanian Comercial Bank (BCR).
Thus, BCR mediated the Transelectrica bond issuance in December 2013 very easily, with the full support of the Financial Supervisory Authority (ASF), in a context in which the “terrible Romanian bureaucracy has proven that it can be defeated,” says Manea.
“The bond offer was subscribed at a rate of 15-20% by the EBRD (the European Bank for Reconstruction and Development). For us it is very important to reduce the dependence on foreign currencies. I think this was the first truly local bond issuance in recent years, “said James Hyslop, director EBRD for Romania. The remaining bonds were subscribed at a rate of 60-70% by insurance companies, investment and asset management funds, and 10-20% by banks.
New bonds issuance and stock market listing are expected
Meanwhile, the Bucharest Stock Exchange (BSE) expects big privatizations. “I think we will have at least one big tranzaction in the first half of this year”, Ludwik Sobolewski, CEO of BSE, told energynomics.ro. The first offer of privatization could be Hidroelectrica, where the state will offer a 15% participation to be listed on the Bucharest and London stock exchanges.
“This year is marked by the launch of Transelectrica bond trading and I think it will be an `electric’ year”, said Sobolewski. The issue (symbol TEL 18) totaling 200 million lei, offers investors a generous yield of 4.5% above the rate of inflation (1.6% in 2013, according to Statistics National Institute).
Transelectrica plans to issues new bonds worth 700 million lei in the following years, and the first issue could be done this summer. “We’ll think of a new issue of bonds, but not earlier than July 1, once the Regulatory Authority for Energy (ANRE) establish rules governing the next five years,” says Transelectrica General Manager, Ștefan Doru-Bucătaru.
In a new economic and political context that “bring new challenges”, Transelectrica will have to finance its investments through new corporate bonds, says Bucătaru. The costs of launching new bonds were at half of the average cost of obtaining bank loans in recent years. The money will be used for investments in the network and interconnection and refinancing of bank loans, now under negotiation. However, some money will be used to hedge “to minimize the risks associated with cost fluctuations and devaluation of national currency”. “In the future we will keep in mind also small investors,” says Bucătaru.
The current issue is part of a total volume of financing of 900 million lei, both in national currency and in foreign currency (201.6 million euros) approved for the period between 2013-2017. State controls through the Ministry of Finance a stake of 58.69%. 13.5% shares belong to Fondul Proprietatea and SIF Oltenia owns 6.85%.