OREANDA-NEWS. June 23, 2015. Fitch Ratings says the the City of Bucharest (Bucharest; BBB-/Stable) has reduced its refinancing risk with the successful issue of RON2.2bn municipal bonds.

The bonds' proceeds are being used to refinance Bucharest's EUR500m eurobond due 22 June 2015, which represented approximately 75% of its outstanding debt. By refinancing the eurobond with local currency bonds, the city has also significantly reduced its high foreign exchange risk, even though this risk was limited by the stabilisation of the leu since the Romanian Cantral Bank adopted a managed floating exchange rate regime in 2004.

On 5 May 2015, Bucharest finalised the placement of RON2.2bn of municipal bonds in four tranches with maturities in 2018, 2020, 2022 and 2025. The tranche amount is about RON555m each, with bullet repayments. Average cost of funding is around 3.98% as all tranches have fixed interest rates ranging from 2.8% to 5.1%.

In Fitch's view, this has positively contributed to the city's capital market access since this series of bond issues with different maturities will make Bucharest a better comparable with other issuers while listing the securities at the Bucharest Stock Exchange and settlement via Clearstream should support the bonds' liquidity.

According to the published rating calendar, the next rating review and publication of a rating action commentary will take place 24 July 2015.