Govt considers borrowing from domestic market

TIRANA, June 10 – Government is considering borrowing from the domestic market after failure to issue the country’s first 400 million Eurobond because of instability and high interest rates in international markets, a senior Finance Ministry official has said.
According to Xhentil Demiraj, the Finance Ministry’s debt director, the ministry is monitoring the liquidity of the domestic market and considering issuing a Euro denominated short-term bond.
“Interest rates in domestic lending have constantly dropped. Thus, the one-year benchmark government bond has dropped from 9.24 percent at the end of 2009 to 8 percent currently, which is reducing state budget costs by more than 13 percent,” said Demiraj.
Albania was expected to issue the bond by the end of last April but delayed it in the face of soaring bond yields caused by the Greek debt crisis.
Government plans to raise as much as 400 million euros ($532 million) of bonds in a debut international offering postponed by two years because of the global financial crisis. Deutsche Bank AG and JPMorgan Chase & Co. are managing the sale. The Finance Ministry will use almost 200 million euros to pre-pay a syndicated loan, according to a statement. The bonds are to mature in 3 to 5 years with an interest rate of up to 8.5%.