Standard & Poor’s keeps Romania BBB- rating as junk avoided
Romania has avoided a downgrade to junk status after Standard & Poor’s confirmed the country’s sovereign credit rating at “BBB-” with a negative outlook on October 2, 2026.
The rating confirmation comes as the country has operated with an interim government since the cabinet led by Bolojan was dismissed on May 5, 2026. A subsequent attempt by European Parliament member Siegfried Mureșan to secure an investiture vote as prime minister failed in Parliament on September 30, 2026, leaving the executive branch in limbo and heightening market anxiety.
Investors Suffer Losses After Shorting Romanian Debt
Ziarul Bursa reported that investors who bet on an imminent downgrade suffered losses when S&P maintained the “BBB-” rating. In the weeks leading up to the decision, credit default swaps (CDS) insuring Romanian debt against default for five years climbed to the highest level among more than 60 investment-grade countries tracked by Bloomberg. Yields on two-year leu-denominated bonds reached 6.52%, marking the highest rate in the European Union.
Financial markets had priced in a two-notch downgrade to “BB” starting from early 2025 due to accumulating national debt and political friction. Because S&P kept the rating stable, short positions on Romanian bonds and expensive CDS protections resulted in financial losses as bond prices rebounded and risk premiums evaporated.
Political Instability and Legislative Action Under Scrutiny
Former President Traian Băsescu stated in an interview with Digi24 that Romania narrowly avoided a downgrade and warned that ongoing political instability could complicate future evaluations. Băsescu noted that the S&P report acknowledged a crucial reality: parliamentary parties managed to pass necessary legislative measures despite the collapse of the government.
Economist Christian Năsulea explained to Adevărul that ratings agencies prioritize a state’s capacity to service debts, refinance obligations, and attract external financing over the formal presence of a fully empowered political cabinet. Năsulea added that if political deadlocks prevent the adoption of a new budget for 2027, the state could theoretically rely on monthly expenditures equal to one-twelfth of the 2026 budget, though he cautioned that this emergency mechanism presents significant administrative challenges for public services.
Market Volatility and Yield Adjustments at the Bucharest Stock Exchange
Ziarul Financiar reported that despite recent volatility, the Bucharest Stock Exchange's BET index has retained a year-to-date gain of over 30%, driven by strong performances from select companies such as Premier Energy and Romgaz. Marcel Murgoci, trading director at Estinvest, noted during an appearance on the financial program ZF Deschiderea de Astăzi that buyers remained more active than sellers despite consecutive weeks of market turbulence tied to the protracted governmental crisis.
Meanwhile, the Ministry of Finance reported that in the first seven months of 2026, the state spent over 40 billion lei on interest payments, representing a 26.5% increase compared to the same period in the previous year. In response to ten-year bond yields reaching approximately 7.6% at the end of September, the Ministry raised yields for the Tezaur and Fidelis state bond issues for October 2026. The new annual interest rates for the Tezaur program, running from October 5 to November 6, 2026, are set at 6.50% for a one-year maturity, 7% for three years, and 7.50% for five years.
