November 2004
(source: ACT Media)
Three energy companies to be listed on stock exchange market as of mid-2005
Three energy operators, namely Electrica Transilvania Nord, Electrica Muntenia Nord and Transelectrica will trade on the stock exchange market minor share packages beginning with the summer of 2005, the Romanian prime minister's advisor on energy issues Ion Popa announced Wednesday at the Capital Market Forum organized by Finmedia. According to him, Electrica branches will list 10 percent of shares each, while Transelectrica will offer only 5 percent of its shares. As for listing 5 percent each of the shares of Transgaz and Romgaz natural gas companies, the governmental advisor specified that it could happen no sooner than in 2006. In his turn, Electrica general manager Nicolae Goroiu said his company will cooperate in order to put into practice the trading of derivates on the stock exchange energy market. "I think that Romania will have a regional energy market in two years," Goroiu said.
(source: ACT Media)
Romania's foreign exchange reserves close to 10 billion euros
The foreign exchange reserves of the National Bank of Romania (BNR) stood at 9,950.1 million euros at end-October, the BNR announced.
The 204.3 million euro increase in October was the result of operations such as purchases by the central bank from the foreign currency market worth 218.1 million euros, revenues from the management of the international reserves worth 25.1 million euros, payments of 19.6 million euros as interest rates falling due to the direct foreign public debt guaranteed by the Finances Ministry and other net outflows worth a total 19.3 million euros. The gold reserve kept steady at 105.1 tonnes. Given the evolution of the international prices, its value went down to 1,129.5 million euros, therefore the BNR international reserves (foreign exchange plus gold) amounting to more than 11.07 billion euros. The payments due to the direct foreign public debt guaranteed by the Public Finances Ministry by year-end total 264 million euros, the BNR said.
(source: ACT Media)
Electricity market is 55 percent free
The electricity market in Romania got 55 percent free as of November 1, compared with 40 percent in the first half of this year. The liberalization percentage of the Romanian energy market was bigger than that of the other markets in the region, and the roadmap on a long term in the field of energy says that the market will be 80 percent free as of June 30, 2006, and 100 percent free starting 2007.The gas market will be 50 percent free not long from now, 75 percent as of June 30, 2006, and starting 2007 it will be totally free.Romania said it will fully open its energy and gas markets by 2007, when it is scheduled to enter the EU.The liberalization of the energy market in Romania started in the year 2000 with the electricity market, which was 10 percent free for the beginning, the gas market opened 10 percent in 2001, when the energy market got 15 percent free.
(source: ACT Media)
Potential investors in Cernavoda nuclear power plant Unit 3 are expected
Romanian Economy and Trade Ministry (MEC) until November 30 expects letters of intent from investors interested in financing the works at Cernavoda nuclear power plant Unit 3, MEC Minister Dan Ioan Popescu said late last week.
"We want a public-private partnership for the works at Unit 3. We need about 700 million -1 billion euros to conclude the works. ACL Canadian company and Ansaldo Italian company voiced intention to participate in the project, but we have to find the necessary amounts. The two companies will participate only as regards the equipment, and we need to find a partner to come up with the money. We are discussing the issue with the Italians, the French, the Koreans and the Canadians,"Popescu said.
Deloitte&Touche Consultanta will assist Nuclearelectrica National Society in finding proper financial means that should limit the state's direct involvement in guaranteeing the financing, according to the EU practices, the drawing of foreign investors and the creation of a project company on a public-private partnership, to conclude the works at Cernavoda power plant Unit 3 by 2011-2012.
(source: ACT Media)
Petrom privatisation, most valuable acquisition in region, says Economist Intelligence Unit
Romania leads in a classification made by Economist Intelligence Unit (EIU) covering Eastern and Central Europe, based on the value of trans - border mergers and acquisitions performed in the first nine months, with the most significant transaction being the Petrom privatisation. According to EIU data, the value of mergers and acquisitions made by foreign companies in Romania has reached 1.888 billion dollars, compared to 283 million US dollars between January - September 2003. The second position belongs to Poland, with 1.422 billion dollars, the total value of transactions in the regions being 5.72 billion dollars, up 15 percent.
The most valuable transactions have been the Petrom take-over by the Austrian company OMV, in July, against an amount of 1.7 billion dollars, and the investment made by the LNM group in the Polish metallurgical group Polski Huty Stali, worth 1.1 billion dollars.
The privatisation of electricity distribution companies Electrica Banat and Electrica Dobrogea, sold to the Italian group Enel for an amount of 143 million dollars, ranks the 8th in this classification. EIU survey also refers to the fact that Gas de France has recently concluded an agreement with the Romanian authorities related to the privatisation of Distrigaz Sud at a value of 330 million Euro.
Other significant transactions were the take-over of the Hungarian plant Dunaferr, by a group of investors, against a value of 473 million Euro, the acquisition of the telecom company Kar - Tel Kazakhstan by the Russian company Vimplecom, against an amount of 425 million dollars, as well as the sale of Bulgar Telecom to the American investment fund Advent.
EIU analysts estimate that the growth rate of trans - border mergers and acquisitions in the region will accelerate over the next year, further to the worldwide developments, transactions announced in Russia, particularly in the energy sector and completion of privatisation of assets that are still state run in the region.
(source: ACT Media)
Last week's BizDays session on the real estate and construction market gathered the most active players in the field, who highlighted anticipated short-term developments in the industry, mostly office and residential projects, Business Review magazine informs.
The overall value of real estate transactions is to reach this year some 7.5 billion dollars, compared with 6.6 billion in 2003.
The level should be around 11 billion dollars in 2007, according to Raiffeisen Banca pentru Locuinte (RBL). "Forecasts indicate that the volume of real estate transactions has a growth potential of around one billion dollars per year and it is estimated that the number of constructions transacted on the market will increase by 30 percent each year," said Ionut Costea, president of RBL.
He noted that around 800,000 new houses are needed in Romania, as some eleven percent of the eight million houses have two or more inhabitants per room.
Also, some 56 percent of the existing housing stock needs thorough repair and modernization works.
"Some 6.4 million people want to modernize something in their current home while 1.8 million want to buy a new one. These figures show that the Romanian real estate market has an extended growth potential. The market has already became attractive to financial institutions, investment funds and construction companies," Costea added.
By 2006, the overall supply of office space will be around 780,000 sq.m., according to Radu Lucianu, commercial department manager of Eurisko.
The specialized market had experienced sluggish growth until 2002, when massive investments in this sector began. By year-end, the overall rented office space will be around 580,000 sq.m.
The highest concentration of office space is in Bucharest, especially in the north, owing to the large amount of green areas, relatively little traffic and the easy access to northern residential areas that are preferred by many experts employed by multinationals, according to Lucianu.
There is also a high degree of office construction taking place in Timisoara and Cluj. There was a large amount of demand stemming from large multinational companies in the past two to three years.
Companies are mostly searching for office space below 1,000 sq.m. and would rather rent than buy their premises.
The watershed moment in 2004 will be the delivery of a class A office building in Charles de Gaulle Square. The building is one of the largest steel structures under construction in Eastern Europe, encompassing some 15 storeys with an overall surface of 30,000 sq.m. for above-ground levels.
Regarding Bucharest, experts from real estate company Eurisko predicted that the market will be divided into two categories, one of luxury houses and apartments and the other targeting the middle class.
"Both categories will see price hikes, which will be more pronounced for luxury residences, where prices may reach 3,000-4,000 euros per sq.m. The increase will cover both the high demand and the rise in prices for construction materials and manpower," said Ionut Bordei, senior broker at Eurisko.
He added that the northern part of the city will remain the hot spot for investors in the residential sector, while new areas, such as Balotesti, Corbeanca and Sisesti will see an increase in construction works, as there are around 100 projects announced for these areas.
"We are talking about serious investors that bring budgets of at least 10 million euros for their projects. Unfortunately, it seems that real estate projects are carried out very well outside Bucharest limits, but in the city everything develops at a very slow pace because of bureaucracy," Bordei added.
(source: ACT Media)
Fitch Ups Romania Ratings 2 Grades
The Bucharest government Wednesday hailed Fitch’s decision to raise Romania’s ratings by two grades at once. Romania has thus moved out of the speculative category of issuers entering for the first time into investment grade category, a major progress reflecting the country’s improved solvency and strengthened external position, said the government spokesperson.
The international rating agency Wednesday announced upgrades on Romania’s long-term foreign currency and local currency sovereign ratings to 'BBB-' and 'BBB' respectively, from 'BB' and 'BB+'. At the same time, the short-term rating and country ceiling were upgraded to 'F3' from 'B' and to 'BBB-' from 'BB,' respectively. The outlook, Fitch said, was stable.
Earning investment grade rating, a grade acceptable to all categories of investors, was the result of Bucharest’s persistent, sustained efforts to implement sweeping economic reforms for the past few years, said the government spokesman. The government’s policy has therefore gradually materialized in upgrades on Romania’s sovereign ratings by all the major agencies,
Fitch said on Wednesday that their latest radical upgrade was supported by Romania’s prudent fiscal policy, advances on key structural reforms, and good prospects on European Union accession. According to the agency’s release, “Important breakthroughs in energy reform and privatizations have earned Romania the ‘functioning market economy’ status from the EU and kept the January 2007 accession date on track.”
An estimated GDP growth of 7.5 percent in 2004 is bolstering budget revenues, and has allowed the government to make two downward adjustments to its budget deficit target, currently set at 1.6 percent of GDP. Narrow budget deficits, together with robust GDP growth, a strong exchange rate, and solid privatization revenues, are supporting favorable public debt dynamics, said the agency. Fitch analysts were also optimistic that Romania would continue to generate large balance of payments surpluses, building foreign reserves and keeping a lid on net external debt, forecast at some 19 percent of GDP at year’s end.
The upgrade, said the government, along with the simultaneous promotion to investment grade, will minimize Romania’s borrowing costs on the world capital markets and will further bolster the country’s capacity to finance budget deficit and refinance public debt paving the way to lower foreign debts. At the same time, the sharp upgrade will spark an increased interest in Romanian ‘greenfield’ investments. This will not only ease financing of the current account deficit, but will also impact positively on employment, the government predicted.
Also according to the government, the British agency’s decision once again confirmed Romania’s progress in implementing economic reforms, as already illustrated by the country’s agreements with the international lending agencies and European Union. This in turn will further boost investors’ confidence that they will find here a stable business environment and a strong institutional and legislative framework. Cautious investors, said the government, will certainly feel reassured by the Fitch upgrade and will overcome their reservations with respect to Romania’s business opportunities. Higher foreign investment will lead to the development of new businesses that will increase local budget revenues and spur job creation.
(source: ACT Media)
FDI of 1.2 billion euros in first three quarters
The value of foreign direct investments (FDI) attracted by Romania in the first three quarters of the year amounts to 1.2 billion euros, according to statistics released by the National Trade Registry Office (ONRC). Investments carried out in September exceeded by 0.6 per cent the value reported for the previous month, reaching 63 million euros. According to ONRC data, 890 companies were set up in September, most of them registered in Bucharest, followed by the North-East and Centre development regions. First in the top of investors who set up new companies came Italian nationals with 236 companies, followed by German and Hungarian investors. Ispat Sidex ranks first in the top of companies in terms of foreign contribution to subscribed share capital, by 16.1 million euros, followed by Aro (4.3 million euros).
The value of FDI in January - August 2004 stood at $1,399 million, i.e. 43 per cent higher than in the corresponding period of 2003. The latest investment data point to an increased interest in industrial sectors, such as the automobile industry, the electronic components and IT, real estate market and services. On the other hand, according to recent statements made by Foreign Investment Council (FIC) Executive Manager Ruxandra Stan, at present some 80 per cent of the foreign direct investments are generated by investors already operating in the Romanian market. Also, whereas foreign investors were focusing on the fiscal system stability until a while ago, currently the focus of attention has shifted towards the enforcement of fiscal legislation.
According to Alexandru Popa, head of the Romanian Agency for Foreign Investments (ARIS), the FDI attracted by Romania in 2004 will exceed 2 billion euros, accounting for a 25 per cent rise compared to year 2003.
According to ARIS data, new entries in the portfolio of projects assisted by the Agency in September and October are Montupet, France, with a 120-million-euro investment, and Coficab, Tunisia, with 25 million euros, both with investments in the automobile industry. Also, the brick production unit operated by Wienerberger in Gura Ocnitei (20 million euros) was inaugurated, while German holding Tengelmann announced its intention to launch a 120-store supermarket chain in all the main cities in the country, the investment amounting to 200 million euros. According to ARIS, Canada's Celestica has recently decided to invest some 100 milliin euros in Bihor county, in order to develop production operations in Eastern Europe
(source: ACT Media)
BUCHAREST CONFERENCE HIGHLIGHTS EX-IM BANK FINANCING FOR SOUTHEAST AND CENTRAL EUROPEAN INFRASTRUCTURE
More than 100 business, banking, and local and national government leaders from nine Southeast and Central European countries are discussing ways to advance infrastructure financing with U.S. and Western European government and banking officials here during a two-day Infrastructure Finance Conference organized by the Export-Import Bank of the United States (Ex-Im Bank), US Embassy said in a press release .The conference is focused on financing for transportation, telecommunications, water, wastewater-treatment, health-care, energy, and other types of infrastructure projects in countries from Poland to Serbia and from Romania to Turkey. Ex-Im Bank officials are emphasizing efforts to develop municipal and other local projects, as well as public-private partnerships.“Financing significant infrastructure projects and expanding U.S. trade with Southeast and Central Europe are both key objectives of the Export-Import Bank,” Ex-Im Bank Chairman Philip Merrill said. “Infrastructure is vital to economic development and to the well-being of any nation and community.” Ex-Im Bank, which has helped finance nearly $2 billion in U.S. exports to the region during the last half-dozen years, has a long track record in infrastructure financing and features an initiative to provide financing for municipal and regional projects without national-government, or sovereign, guarantees. Ex-Im Bank and the European Bank for Reconstruction and Development, which is also participating in the conference, are unique in providing financing to local governments.“While multilateral development banks provide financing for infrastructure projects in poorer countries, equity, bond, and commercial-lender financing is often unavailable particularly for national, city, and state governments in areas such as Southeast and Central Europe,” Ex-Im Bank Senior Vice President and Head of Export Finance Jeffrey Miller said in remarks prepared for delivery today. “That’s where export credit agencies such as Ex-Im Bank play such a critical role.”U.S. Ambassador to Romania J.D. Crouch II is expected to affirm the importance of U.S. economic and security relations with the region in today’s luncheon keynote address.This year, Ex-Im Bank marks its 71st year of helping finance the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export credit insurance, and direct loans. In fiscal year 2003, it authorized financing to support $14.3 billion of U.S. exports worldwide.
(source: ACT Media)
North American companies Carpathian Energy and Oracle Energy to start oil and natural gas production in Romania
The North American companies Carpathian Energy and Oracle Energy developing operations for oil and natural gas fields in Romania are waiting to start production in the next months, said representatives of Oracle Energy . Oracle Energy announced that it bought 20 percent of the Carpathian Energy shares for six oil fields in Romania previously abandoned by Petrom.
American and Romanian experts in geology with Carpathian Energy discovered that only 10 percent of the recoverable reserves have been emptied because Romanian authorities underestimated the potential of these fields.
Romania is considered a "mature oilfield" by many experts, meaning that there are small chances for the operators to find new deposits with large reserves.
After 1989, foreign companies invested over 220 million dollars in natural gas and oil operations, with Shell, Conoco, Total, Wintershall and Amoco among them.
Only the German company Wintershall was successful as it discovered natural gas deposits near Sighisoara (central Romania) and started production as of this year.
(source: ACT Media)
JP Morgan and ABN Amro to sell Bucharest City Hall bonds on foreign markets
A consortium made up of investment banks JP Morgan and ABN Amro is close to winning the contract for intermediating a eurobonds issue worth 120 million euros that Bucharest City Hall plans for early next year. The two banks could thus win a tough competition also involving Suisse First Boston, Deutsche Bank, City Bank, BNP Paribas and UBS Wartburg among competitors. The intermediating value of the contract is variable and accounts for up to 1 percent of the whole sum plus other due spending, some 1 million euros in all if the issue is successful. This is the first time when Romania resorts to foreign capital markets for financing, after having issued only internal municipal bonds so far. Bucharest City Hall will use the money to finance infrastructure works. Initially, the City Hall intended to launch an issue of bonds worth 500 million euros.
(source: ACT Media)
Foreign investments on Bucharest Stock Exchange in October higher than last two years
Foreign investors in October brought at the Bucharest Stock Exchange as many money as 2002 and 2003 brought together. The value of net purchases of shares by foreigners last month stood at 34.8 million euros, doubling this year's value of foreign investments. Last year, foreigners bought shares from the Romanian market worth 21.5 million euros, whereas net foreign investments in 2002 stood at 12 million euros. Last month, foreigners purchased as many as 62 percent, accounting for 55.7 million euros, of the total of shares.
Director of Alpha Finace, a brokerage company of the Greek Alpha Bank, Florin Aldea quoted by Ziarul Financiar says that in terms of foreign investors, Romania has made headway because it has the highest economic growth in the region. Despite of Romania's near general elections investors keep on investing. Last month's largest transactions on the market were traded with shares of national oil company SNP Petrom, Rompetrom Rafinare (at Petromidia) and the Romanian Bank for Development - Groupe Societe Generale (BRD-GSG).
Faber Invest and Trade company purchased a 5 percent stake in Petromodia for 13-14 million euros. Also traded were shares of Petrom worth over 30 million euros, a part of them being acquired by American fund Julius Baer International Equity Fund.
Besides, the financial investment company (SIF) Banat Crisana sold a 0.22-percent stake in BRD for 2 million euros, the packages being most likely bought by foreign investors.
(source: ACT Media)