Traders are treating Romanian bonds as the European Union's only junk-rated sovereign debt, with high yields attracting investors despite a protracted political crisis in Bucharest. Romania's five-year credit default swaps cost 144 basis points, the highest among over 60 investment-grade sovereigns tracked by Bloomberg, while its two-year yield stands at 6.52%, the highest in the EU.

Many fixed-income investors view these yields as sufficient compensation for risks in the Black Sea nation, which has faced crisis since a government collapse in May over austerity measures. "At the current levels, it's starting to be attractive to buy," said Juan Orts, strategist at Societe Generale SA in London. Orts noted Romania "dodged the bullet" when Fitch Ratings kept its BBB- rating in July and expects it to avoid a downgrade from S&P Global next month. The country holds the lowest investment-grade rating at all three major agencies.

Investors focus on robust deficit reduction this year and expectations for similar trends in the 2027 budget. Romanian CDS costs have fallen from 167 basis points in April. Viktor Szabo, investment director at Aberdeen Investments, sees value relative to its rating profile. However, a weak 2027 budget could push Romania into junk territory. President Nicusor Dan has scheduled talks with main political parties this week to designate a new prime minister and break a four-month deadlock.