Experts divided over Albania’s upcoming Eurobond

Tirana Times
By Tirana Times September 25, 2018 11:40

Experts divided over Albania’s upcoming Eurobond

TIRANA, Sept. 25 – As Albania is tapping capital markets for its third Eurobond, local experts are divided in their opinions over the country’s expected performance in borrowing another €500 million at favorable rates.

“I don’t think this Eurobond is an indicator of an economic recovery or that it shows an improvement in the country’s credit rating as both Moody’s and Standard & Poor’s have issued no upgrades,” says Albanian economist Selami Xhepa.

“The same rating has been maintained, but we are hopeful of more favorable terms so that interest rates drop from 5.7 percent to 4 percent. That would be really interesting as outstanding debt is refinanced at a lower rate and lower debt servicing creates space for more investment,” Xhepa has told local media.

Meanwhile, economist Adrian Civici says the Eurobond will give an impetus to the economy.

“Part of this Eurobond goes to buy back the 2015 Eurobond which reduces annual government needs to pay off debts, creating bigger space on public investment,” Civici has told a local TV.

“Considering government needs of €700 million in extra financing by 2020 or 2022 that it will have to obtain either internally or from foreign markets, of course this third Eurobond provides oxygen given that on the one hand it stabilizes the debt policy by making it cheaper and extends its maturity and on the other hand, it provides an opportunity for public investment or other government needs,” he adds.

Prime Minister Edi Rama says he is confident Albania will be successful in its upcoming Eurobond issue arguing that the country’s economy, finances and governance are quite the opposite of what the opposition claims.

Albania is tapping international markets to raise up to €500 million in a new 5 to 10-year Eurobond that will also cover buying back a fraction of the existing €450 million Eurobond maturing by November 2020. The operation is expected to be concluded next October.

The last time Albania addressed international markets was in late 2015 when it managed  to secure €450 million in a five-year Eurobond at a coupon rate of 5.75 percent, down from 7.5 percent in its inaugural €300 million Eurobond in 2010.

Tirana Times
By Tirana Times September 25, 2018 11:40