FX.co ★ Romania Government Bond Rallies as S&P Maintains Rating

Romania’s 10-year government bond yield dropped sharply to 7.32% after S&P Global Ratings affirmed the country’s sovereign credit rating at BBB-, easing immediate fears of a downgrade to junk status. With this move, S&P becomes the latest major agency to uphold Romania’s investment-grade rating, though the outlook remains negative.

S&P cautioned that ongoing political instability could undermine efforts to narrow the fiscal deficit over the next two years and may ultimately lead to a rating downgrade. The decision comes as Romania continues to operate without a fully empowered government: the ruling coalition collapsed in May amid disputes over austerity measures, and a second attempt to form a new administration failed last week.

Finance Minister Alexandru Nazare said that fiscal consolidation, absorption of EU funds and public investment are still on course, but emphasized that further deficit reduction and debt stabilisation are critical to safeguarding the country’s credit profile.