FINANCE MINISTRY MISSED ALMOST 300 MLN. LEI AT THE LAST AUCTION FOR THE PLACEMENT OF SECURITIES

At the last auction for the placement of state securities (SS), the Ministry of Finance did not collect nearly 300 million lei. As Infotag reports, offering securities for 970 million lei, the volume of placement amounted to only 691.8 million lei.

As the correspondent was told at the National Bank (NBM), the average yield on government securities remained practically unchanged compared to the last auction held in mid-December 2020: its lower value was fixed at 3.43%, and the upper one - 5.50%. At the previous auction, these indicators were 3.44% and 5.49%, respectively.

The demand for government securities from banks amounted to 963.47 million lei, which is 6 million lei less than the volume of government securities offered by the issuer for placement.

Professional market participants, whose opinion the Infotag correspondent was interested in, say that, “despite the high liquidity of banks, they do not dare to place free resources in government securities in large volumes.”

“The reason for this behavior of banks is the relatively low profitability of government securities. The Ministry of Finance refuses to satisfy the requests of buyers of securities if their yield exceeds the established interest rates, the lower and upper values of which are 3.5% -5.5%,” the agency's source said.

Professional market participants believe that “the situation on the market favors the issuer of government securities, which allows the state to attract resources for the needs of the budget on average 4.46%,” the source stated.

Market participants consider that even such a relatively low yield of government securities exceeds the annual inflation, which by the end of 2020 may come close to zero (the National Bureau of Statistics has not yet announced the inflation rate for December 2020 - "I."). The annual value of the consumer price index at the end of November 2020 was 0.16%.

Due to the uncertain political situation associated with the absence of a government and the likely early parliamentary elections, a number of experts predict that the Ministry of Finance will have to increase the volume of government securities in the first half of 2021 in order to meet the budget needs.

“Due to the political crisis, in the first half of 2021 Moldova will significantly reduce financial support from external partners, first of all, the IMF, a new program with which the government of Ion Chicu was able to agree, but due to the political situation in the Republic of Moldova was approved by the foundation. In the absence of external financing, the state will have to increase the issue of government securities, which may lead to an increase in the yield of securities,” experts stressed.