Bond... Eurobond... The Unknowns Behind a Successful Issue
Automatically translated summary. The full text is available in Romanian.
In an editorial, Adrian Lupușor and Dumitru Pîntea of Expert-Grup examine the Moldovan Government's plan to diversify budget deficit financing by issuing a Eurobond on international markets. The plan appears in the 2020-2022 medium-term public debt management programme and envisages USD 500 million over seven years.
The authors argue that entering external markets is necessary and conditions are favourable, but the key question is what the money will be used for: Moldova lacks well-defined investment projects able to absorb USD 500 million. Its only previous Eurobond, issued in 1997 (USD 75 million), ended with a restructuring of USD 40 million.
They identify three priorities: a clear investment strategy with projects, preferably infrastructure, that can repay the debt; an inter-institutional body involving the Ministry of Finance, the Ministry of Economy and the National Bank of Moldova; and transparent, merit-based selection of intermediaries, including the lead manager, legal adviser and rating agency. The issue must also respect EU Association Agreement commitments, avoid opaque arrangements and not replace support from development partners.
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