Daily Economic Briefing – August 6, 2013

Romania Property Fund: A new agreement with IMF should be a good signal for foreign investors

Franklin Templeton and Romania Property Fund representatives claim that the signing of an agreement between Romania and the International Monetary Fund (IMF), World Bank and EC is encouraging signal for the national economy and, most importantly, a positive signal for foreign investors. “Franklin Templeton Investment Management Limited UK, Bucharest Branch, as Sole Administrator and Fund Manager of SC Fondul Proprietatea SA (Romania Property Fund – Ed.), welcomes the agreement between the Romanian authorities, on the one hand, and the International Monetary Fund, European Commission and World Bank, on the other hand, regarding the development of an economic program which will be supported by a new stand-by agreement”, a communique reads.

The National Bank of Romania expects an economic growth of over 2% this year

The National Bank of Romania (NBR) has reviewed its forecast for economic growth this year to over 2%, based on the evolution of exports, industrial production and based on a good agricultural year, NBR Governor Mugur Isarescu stated. “Our econometric model does not target the economic growth, which is an item that helps us make the inflation forecasts. So don’t take our forecast as the best”, NBR Governor specified.

NBR cuts the key interest rate from 5% to 4.5%

Mugur Isarescu, Governor of the National Bank of Romania (NBR), hopes that the reduction of the key interest rate from 5% to 4.5% will result in lower rates for loans in RON within a short time, “maybe even from next month”. The Board of Directors of NBR decided on Monday to reduce the monetary policy rate from 5% to the record low of 4.5% per year, more than the financial and banking analysts were expecting, who anticipated a decrease to 4.75%. In early July, NBR reduced the key interest rate from 5.25% per year  to 5%.

Transactions with office spaces of less than 3,000sqm dominated H1 2013

The number of transactions made on the office market in Bucharest increased by 22% in the first half this year, compared to H1 2012, the engine of this growth being relocation transactions, with areas below 3,000sqm. Out of 124 transactions, 107 were for relocation, totaling 66,089sqm, which accounts for 58% of the total rented area in H1 2013. Out of the 107 relocation transactions, 55 transactions were concluded through ESOP Consulting / CORFAC International, which represents a share of 51%.

Romania Property Fund (BSE: FP) bought back 17.43 million shares

Romania Property Fund repurchased, during July 29^th – August 2^nd, a number of 17.43mln shares, according to a company press release. The total value of transactions made through Banca Comerciala Romana (BCR) amounted to RON 11.36mln. FP titles closed yesterday’s trading session at RON 0.6620/unit, after a slight appreciation of 0.46%.

Romania’s glass maker Stirom Bucharest (BSE: STIB) could back a loan of EUR 300mln to be secured by a company in Netherlands

Glass packaging manufacturer Stirom Bucharest, part of the Greek group Yioula Glassworks, could guarantee with several assets a loan of EUR 300mln to be secured by Glasstank, registered in Netherlands. Loan guaranteeing has been included on the agenda of a General Meeting of Shareholders, upon request from the majority shareholder, MGL Mediterranean Glass Limited, according to a convening notice submitted on Monday to the Bucharest Stock Exchange (BSE). Greek group Yioula Glassworks owns 93.4% in Stirom through MGL Mediterranean Glass Limited, company registered in Cyprus. A decision on backing the loan to be secured by Glasstank will be made by Stirom shareholders in a general meeting scheduled for September 9^th.

PCC and Fortissimo Capital join forces for Oltchim (OLT) privatization

PCC SE, minority shareholder of Oltchim Rm. Valcea, and Israeli investment fund Fortissimo Capital will establish a consortium for the privatization of the Valcea-based plant. Wojciech Zaremba, representative of PCC SE in Romania, stated: “We have been involved in Oltchim case for seven years, we participated in the privatization process last autumn, and now we will take part in the second attempt to privatize the company. A month ago I submitted our letter of intent, I said that PCC was interested in buying the entire stake in Oltchim and today we joined forces with the investment fund <<Fortissimo Capital>> and submitted together a letter of intent, by which we show our willingness to buy Oltchim”. Fortissimo Capital is a private investment fund which started talks on privatization with the plant’s officials this spring. The fund has assets of USD 0.5bn and mainly invests in public and private Israeli companies in technology and industry, which need capital injections for business development.