Tirana Times
TIRANA, Oct. 21 – Government has changed its mind about abandoning Albania’s Eurobond issue this year, announcing that it could emit the country’s first ever 400 million euro-denominated bond by the end of this month.
The decision was taken last Monday at the parliamentary economy committee and turned into law later on Thursday, when some changes were approved to the government deal with Deutsche Bank AG and JPMorgan Chase & Co. who are managing the Eurobond sale, parliament said in a statement.
The changes aimed to accelerate the Eurobond issue come after international financial markets, especially in Greece, have recently stabilized, which make the Finance Ministry think it could borrow from international markets to pay off loans.
Opposition Socialist Party lawmakers warned the Eurobond, postponed since April 2010, was being issued at this moment to be used for next year’s local elections.
Denying SP’s claims, Xhentil Demiraj, the debt director at the Finance Ministry, said the Eurobond issue was needed to pay off the high interest rate syndicate loan government took last year to finance the Durres-Kukes highway, linking Albania to Kosovo. Last July, Prime Minister Sali Berisha told Reuters Albania had scrapped plans to issue a Eurobond in 2010 “In this such terrible situation as it is, we withdrew from the eurobonds,” said Berisha, adding that “all countries which were (seeking) eurobonds withdrew because Fitch or Standard & Poor’s put Greece debt into junk status.”
The Finance Ministry had earlier said it was watching the financial markets every day and would wait for the appropriate moment to issue the country’s ever Eurobond.
The ministry’s debt director said the ministry was monitoring the situation with Eurobond managers JP Morgan and Deutsche Bank and would wait until the markets stabilize and interest rates fall.
The Ministry said the only emergency for the issue of Eurobond could be the payment of a syndicate loan government took to finance the Durres-Kukes road last year, but as the deadline for the payment of the next installment has expired the Finance Ministry saw no other reason for emergency.
This is Albania’s several attempt in a row to emit Eurobonds after an effort in early 2009 was abandoned due to the global financial crisis, forcing the Ministry of Finance to opt for a costly syndicated loan. The Ministry selected two international banks in March 2009 from which it borrowed 250 million euros. The loan was intended to finance the Rreshen-Kalimash highway which links Albania with Kosovo,
Albania was expected to issue the bond by the end of last April but delayed 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. 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 7.5%.
Last July, the Albania Ministry of Finance managed to get 25 million euros in nine month treasury bills from local banks, after an attempt to issue Eurobonds in the international market failed in May.
Officials from the Ministry of Finance said that the nine month maturity bills were bought by local banks with an average interest rate of 5.8 per cent.
