​MoF GETS 159.6 MILLION LEI FROM GOVERNMENT SECURITIES PLACEMENT AT AUCTION

The upper and the lower rates of government securities yield have stopped falling. At the Tuesday’s auction, the state security issuer – the Ministry of Finance placed securities at a sum of 159.6 million lei (US$7.9 million), proposing for placement 180 million lei. The securities’ average yield accounted for 7.98%-8.31% against the previous auction’s rate of 7.94-8.32%.

According to the National Bank of Moldova (NBM), the sum the issuer received in budget is 2.1 million lei higher than at the previous auction.

The auction results demonstrated considerable growth of banks’ demand for government securities. Thus, at MoF supply worth 180 million lei, the demand from banks accounted for 240.5 million lei, which is 66 million lei more than the last week rate.

Experts say that the stabilized government security yield represents a balanced interest, which equally suits both the issuer and buyers of government papers.

“The yield should be proportionate with the main market indicators, for example the National Bank of Moldova (NBM) base rate, which has fallen to 9.5% from 19.5% over half a year, as well as the average yield rate, which accounts for slightly more than 8% today”, said the Infotag interviewee.

Forecasting the short-term perspective – December 2016 – beginning of 2017, the market participant said that the Finance Ministry is working in close tandem with the NBM.

“As soon as the demand for government papers falls to the critical level, the NBM will make a step towards the security issuer, starting to gradually lowering bank required reserve ratio, which will release a certain amount of resources. But it is too early to talk about this, as banks’ liquidity rates exceed 40% at the normative of 20%”, he said.

Other experts pointed at unblocking by the Government of the external financing to Moldova, which is theoretically possible after November 7, when the International Monetary Fund (IMF) Executive Board of Directors will approve the Financing Problem of Moldova.

It is about the fact that until end-2016 the Government expects to receive more than 3 billion lei. Out of these money, more than 1 billion lei accounts for grants. These resources will replenish the state budget and the Finance Ministry will not have great need of borrowing money on the market.

Infotag’s dossier: The availability of a Program of Cooperation with the IMF gives the Government hope to receive 55 million euros from the European Union, US$45 million from the World Bank (WB) and US$26 million from the IMF until the end of the year, according to the three-year Program of Cooperation between the Government and the NBM with the Fund with the financial component worth US$182 million.