Pioneering bond issue helps City of Bucharest meet financing needs
In 2015 the EBRD invested 333 million Romanian lei (€75 million equivalent) in a bond issue by the City of Bucharest which the Bank hopes will encourage other municipalities in the region to meet some of their important financing needs through the capital markets.
The 2.2 billion Romanian lei (€500 million equivalent) bond issue, which the EBRD supported with extensive policy dialogue, mitigates foreign exchange and devaluation risk for the City of Bucharest by switching long-term funding from foreign to local currency. The municipality, which serves around 1.9 million citizens, will use the proceeds of the bond issue to refinance its existing Eurobond, enabling it to maintain its investment programme.
The landmark transaction will assist in building a capital market yield curve for municipalities. This will facilitate similar bond issues by enabling other large cities and investors to price municipal risk more accurately.
The proceeds of the bond issue will enable the municipality to maintain its investment programme