Romania | The twin deficit will have a price to pay

The Romanian economy has been growing fast, but at a price of a massive twin deficit and high reliance on external funding.

What you will learn about:

  • We downgrade Romania hard currency bonds to underweight, as the country is likely to lose its IG status and we find the risk-reward unattractive at this point.
  • The large imbalances are exposing the country to potential outflows.
  • Romanian bonds are traditionally trading tighter than fair value, but we note that the recent rally has not factored in the deterioration in fundamentals.

Topics: Europe, Eurozone, Bonds, Strategy, Coronavirus, Macro, Romania

Romania: The twin deficit will have a price to pay