se times
11/11/2010
In an effort to ease last year's cost of commercial debt, Albanian government issued its first Eurobond.
By Jonilda Koci for Southeast European Times in Tirana –11/11/10
In an effort to ease last year's cost of commercial debt, Albanian government issued its first Eurobond.
By Jonilda Koci for Southeast European Times in Tirana –11/11/10
Albanian authorities confirmed that Albania debuted its first five year, 300m Eurobond on the international market with a five year maturity at a maximum interest 7.5 % rate late last month.
“This is an historic moment not only for our government, but for all Albanians. Issuing of the Eurobond in this coupon and interest rate confirms the credibility to the Albanian economy," said the Albanian minister of finance, Ridvan Bode.
Despite the authorisation to issue 400 million euros, official sources from the finance ministry said they decided to issue a lower amount, while carefully analyzing the debt portfolio and the Eurobond interest rate.
Standard & Poor's has given Albania a rating of B+. Deutsche Bank AG together with JPMorgan Chase & Co. is managing the sale on behalf of the Albanian government.
Albania planned the Eurobond launch in April, but postponed it due to the Greek financial crises and fear of escalated debt speculation at the time.
"The markets will enjoy the Eurobond of Albania. We think the timing is perfect," said Albanian Central Bank Governor Ardian Fullani for Reuters.
"Now is probably the right moment to come with a new issue," Stuart Culverhouse, chief economist at Exotix Ltd., an investment bank, said for Bloomberg. "The 7.5% yield is "reasonably attractive", he said.
Official sources at the finance ministry say the Eurobond will be used to pay-off a 250 million euros syndicated commercial loan taken in 2009, with a 13% interest rate.
“This is an historic moment not only for our government, but for all Albanians. Issuing of the Eurobond in this coupon and interest rate confirms the credibility to the Albanian economy," said the Albanian minister of finance, Ridvan Bode.
Despite the authorisation to issue 400 million euros, official sources from the finance ministry said they decided to issue a lower amount, while carefully analyzing the debt portfolio and the Eurobond interest rate.
Standard & Poor's has given Albania a rating of B+. Deutsche Bank AG together with JPMorgan Chase & Co. is managing the sale on behalf of the Albanian government.
Albania planned the Eurobond launch in April, but postponed it due to the Greek financial crises and fear of escalated debt speculation at the time.
"The markets will enjoy the Eurobond of Albania. We think the timing is perfect," said Albanian Central Bank Governor Ardian Fullani for Reuters.
"Now is probably the right moment to come with a new issue," Stuart Culverhouse, chief economist at Exotix Ltd., an investment bank, said for Bloomberg. "The 7.5% yield is "reasonably attractive", he said.
Official sources at the finance ministry say the Eurobond will be used to pay-off a 250 million euros syndicated commercial loan taken in 2009, with a 13% interest rate.
The loan was earmarked for the construction of Durres-Kukes highway, a controversial project that remains unfinished. It figured highly in Prime Minister Sali Berisha's political campaign during the last general election.
The Eurobond is being released at a critical time for Albania, since its public debt has increased to 60% GDP. The IMF says the Albanian government's strategy of increasing its reliance on the international market should be accompanied with a reduction of the current debt to a targeted 50% of GDP.
"Not only is public debt on the rise, it is also large when compared to other countries in the region and the average in emerging market economies," the IMF reported in July.
Albania registered economic growth of 2.6% in 2010, and expected to reach 3.2% in 2011, according to an IMF forecast.
This content was commissioned for SETimes.com.
The Eurobond is being released at a critical time for Albania, since its public debt has increased to 60% GDP. The IMF says the Albanian government's strategy of increasing its reliance on the international market should be accompanied with a reduction of the current debt to a targeted 50% of GDP.
"Not only is public debt on the rise, it is also large when compared to other countries in the region and the average in emerging market economies," the IMF reported in July.
Albania registered economic growth of 2.6% in 2010, and expected to reach 3.2% in 2011, according to an IMF forecast.
This content was commissioned for SETimes.com.
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