MinFin plans to issue RON3bn in paper in March, significantly below redemptions of RON6bn over the period. The supply side contraction is aided by the hefty net issuance of close to RON13bn in the first two months of the year, with total issuance around RON22.6bn during Jan-Feb. According to press comments from MinFin treasury chief released on Friday, this covers a third of the RON70bn of the MinFin funding needs for this year.



Notably, the Ministrys treasury chief also was also cited saying that nonresident holdings of RON debt have increased to a historical high of around 21% at end January. By our estimations, this means that in Dec-Jan, net foreign inflows into domestic debt likely totalled around RON14.5bn (slightly above €3bn). The latest available data showed foreigners held only some 5.4% of domestic debt at end November 2012. Another thing to note is the Ministry plans another foreign bond issuance in 2H13, something which will soften further the burden on domestic issuances. The large mismatch between redemptions and issuance in March will probably offer very little room for foreign investments at MinFin tenders, especially as Ministry officials have also pledged to try selling only the planned amounts. But it should nevertheless help domestic debt to rally further possibly at a faster pace, after we have seen another 3bps slide lower in yields on the secondary market for 2-5Y RON bonds on Friday. The RON will also stand to benefit from this process.