Romanian assets caught a break after S&P Global Ratings stuck with an investment-grade mark of BBB-, the floor of that category. It was the last of the three big ratings firms to avoid pushing the Black Sea country into junk this year, a welcome pause for markets navigating a political mess.
S&P left the outlook at negative and said the score could be cut if prolonged political strains impede efforts to shrink the fiscal deficit over the next two years. "The regular rating reviews by the leading agencies are completed for this year, with the focus now on the continuation of the fiscal consolidation in view of the 2027 budget," said Stephan Imre, economist at Raiffeisen Bank International. "Immediate downgrade risks have thus been averted, though rating risks remain due to potential unscheduled rating actions in the fourth quarter."
Romania's 10-year local-currency yield declined 12 basis points to 7.24% on Monday, putting it roughly 40 basis points lower than a week ago. A Bloomberg chart showed yields easing off one-year highs, and financing costs are still the steepest in the European Union.
Equities rallied too. The benchmark in Bucharest climbed 2.9%, the largest advance among global exchanges tracked by Bloomberg. Demand at Monday's auction let the Finance Ministry raise more than planned, selling 532 million lei, or $112 million, of 2028 notes. It was the first government securities sale since early September where the target was successfully met.
The leu nudged up 0.1% to around 5.334 per euro, stabilizing in a softer range after the central bank let the currency weaken last week under its managed-float setup.
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Since a coalition collapsed in May over austerity measures, a caretaker cabinet has overseen Romania. A second try to seat a full government failed last week, which intensified pressure on the currency and pushed the leu to its weakest level ever against the euro.
After a second attempt to form a full government failed last week, pressure on the currency intensified and the leu touched an all-time low versus the euro.
President Nicusor Dan plans another round of talks with mainstream parties and could put forward a new prime minister as soon as Monday to head off snap elections. Interim Finance Minister Alexandru Nazare said S&P's decision showed fiscal consolidation and absorption of European Union funds remain on course, with public investment still supporting the economy. He urged parties to keep narrowing the deficit and steadying public debt.
"To avoid losing what we have managed to safeguard, this effort must continue," Nazare said. "We are not out of the woods yet and we shouldn't become complacent after managing to keep the rating. Romania has a negative track record when it comes to the budget deficit."
A ratings stay lifted prices and trimmed yields, but the negative outlook keeps the spotlight on budget discipline and forming a stable government. The near-term setup improved, yet the next swing will likely hinge on whether leaders can push deficit cuts and keep EU money flowing tied to the 2027 budget.
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