Yields on Romanian government bonds - both domestic and external issues - fell sharply on Monday, by 4 to 11 basis points depending on maturity, following Moody's decision to keep Romania in the investment-grade category, acting Finance Minister Alexandru Nazare said.

Nazare wrote that 'Moody's reaffirmed Romania's rating, keeping our country in the investment-grade category'. He noted that before the announcement, markets had been cautious: 'While 10-year bond yields in other regional countries were falling by 10 - 20 basis points, Romania was an exception, with investors awaiting Moody's decision.' After the rating confirmation, he said, 'the market reaction was favourable', with yields dropping on August 10 compared with Friday's close.

Nazare also pointed to strong demand at Monday's government-bond auction, where investors sought to buy 2.6 times the amount the Finance Ministry planned to borrow. Offers totalled RON 1.79 billion, compared with the RON 700 million initially announced.

'High demand shows increased investor interest in Romanian government bonds,' he said, adding that bids came at competitive yields below secondary-market levels, allowing the ministry to award RON 809.25 million at the same yield. He called the reaction 'a positive signal of investor confidence in Romania's financing capacity', adding: 'Romania deserves all our confidence. With balance and responsibility, I am convinced we can not only maintain the current rating, but return to a 'stable' outlook.'

In the past two weeks, both Fitch Ratings and Moody's have kept Romania in the investment-grade category, maintaining ratings of BBB- and Baa3, respectively, with a negative outlook. AGERPRES (RO - writing by: Andreea Marinescu; EN - writing by: Simona Klodnischi)