Issuing its first foreign currency bonds, government hopes to raise money to finance 2010 budget deficit at a better rate.
TIRANA, Jan. 17 – Looking to raise at least 300 million euros, Albania will be selling its first bonds in a foreign currency to finance budget shortfalls in 2010, government officials announced this week.
Albania is turning to selling international bonds as other types of credit have tightened considerably due to the global recession and issuing bonds offers a way to finance public projects at a better rate, according to the government.
“The public debt for 2010 is a challenge, so we are prepared to have Albania enter in the international market to finance the country’s needs for more money at a better cost,” Albanian Finance Minister Ridvan Bode said.
The program is part of the Finance Ministry’s medium-term financing strategy that ends in 2011, and there will likely be other bonds sold, including some using the U.S. dollar if the exchange rates are favorable, officials said.
In fact, Albania was ready to sell its first euro bonds in 2009, but the government decided to wait until things calmed down in international markets rocked by the crisis.
The things might a be a little bit more better now, but they are still not ideal. However, the government has no other choice but to proceed, as it needs to finance large public projects that keep the economy growing.
The international bonds will be issued in euros, so it’s a eurobond, and will be government under British regulations. Their maturity will be three to five years, according to the Ministry of Finance.
The cost of borrowing for countries like Albania dropped considerably recently, as investors are starting to wake up from recession hibernation and looking to make their money earn more, according to emerging markets analysts.
“There is no way Albania would have been able to sell bonds 12 months or even six months ago,” Nigel Rendell, an RBC Capital Markets analyst told the Bloomberg news agency this week.
The Moody’s rating agency gave Albania a B1 rating late last year, which puts the country in a stable condition compared to its neighbors, but is still a few steps below the perfect rating of developed economies.
Nonetheless, analysts and Albanian finance officials believe that as appetite grows globally to get out of the recession, Albania will be able to raise the money via the euro bonds.
