Romania Government Bond Rallies as S&P Maintains Rating

Romania’s 10-year government bond yield fell sharply to 7.32% after S&P Global Ratings kept the country’s sovereign credit rating at BBB-, easing immediate concerns over a downgrade to junk status. The decision makes S&P the latest major rating agency to maintain Romania’s investment-grade status, although the outlook remains negative. S&P warned that continued political instability could threaten efforts to reduce the fiscal deficit over the next two years and potentially trigger a rating cut. The decision comes as Romania remains without a fully functioning government after a coalition collapsed over austerity measures in May, while a second attempt to form a new administration failed last week. Finance Minister Alexandru Nazare said fiscal consolidation, EU fund absorption and public investment remain on track, but stressed that further deficit reduction and debt stabilisation are essential to preserve the country’s credit standing.