TIRANA, Oct. 28 – With few days to go before Albania’s inaugural Euro 300 million Eurobond matures, the Albanian government has not announced a deal on a new Eurobond yet despite intensive meetings with potential investors in a recent road show.
Albania is seeking to raise 300 million Euros or more in a five to seven-year Eurobond denominated in Euro or USD to refinance the five-year inaugural Euro 300 million Eurobond which matures in Nov. 4 2015.
The Albanian government has reselected Germany’s Deutsche Bank and U.S.-based JP Morgan Chase as lead managers of the country’s new Eurobond after the two leading lenders successfully managed Albania’s debut five-year Eurobond of 300 million euros in late 2010.
The finance ministry had initially set the end of July 2015 as the deadline for the Eurobond issue.
“Every delay in the Eurobond issue date and its postponement to the maturity date would be accompanied by an increase in interest rates,” said the ministry responsible for the Eurobond issue.
The Albanian government expects to issue its new Eurobond at considerably lower rates compared to its inaugural 7.5 percent rate in late 2010.
In its mid-term 2015-2017 debt management strategy, the Albanian government has also envisaged scenarios in case of failure to borrow from international markets through a Eurobond.
“In case of failure to issue a new Eurobond, the refinancing of the existing Eurobond will be carried out through a more costly five-year Euro 200 to 250 million credit line,” says the ministry
In an even worse scenario, Albania would borrow about 35 billion lek (Euro 245 million) from the internal market which would sharply increase costs and negatively affect lending, already at sluggish growth rates of 2 to 3 percent.
Last April, Albania selected Deutsche Bank, Germany’s biggest bank, for a Euro 250 million 10-year loan to support public investments and cover its budget deficit.
Albania is rated B1 by Moody’s and B by Standard & Poor’s.
