J.P. Morgan will include Romania in the GBI-EM bonds index series
According to a note from J.P. Morgan, Romania is eligible for entry into the GBI-EM bonds index series. Inclusion will be in a phased approach, over a three month period, beginning March 1st and concluding on May 1st. During each rebalance date, one third of the notional of each included RON bond will enter the index. According to the release, Romania’s potential weight is estimated to be 0.54% in the flagship GBI-EM Global Diversified index upon completion of rebalancing on May 1st, 2013. In the last auctions, the Ministry of Finance borrowed significantly more than the initial intended amounts on elevated demand from investors. We believe the trend will continue on the short term, which should be reflected in lower yields. Additionally, the impact on the FX rate should also be positive for the RON. Moreover, the lower yields should also support stocks valuation through a reduced cost of equity.
Romgaz looking into partnership with Petrom and Exxon for Black Sea exploration
According to media sources, in a TV interview the Prime Minister Mr. Ponta stated that gas producer Romgaz is in discussions with Petrom and Exxon Mobil Corp to look for energy sources in the Black Sea.
We are unsure whether Romgaz is looking into an association to explore Neptun block or another perimeter. Petrom and Exxon have already started a 3D deep water seismic study in the Neptun block after announcing beginning of 2012 that an exploration well led to a preliminary estimate for the accumulation ranging from 1.5 to 3 trillion cubic feet (42 to 84 billion cubic meters). However, we rate the news as positive for Romgaz and Petrom and implicitly for Fondul Proprietatea, as the exploration for new gas sources gives the two oil&gas companies more leverage in front of the government for the negotiation of the royalties.
