Government will issue a 9-month euro-denominated bond worth 25 million euros
TIRANA, June 23 – The Finance Ministry has announced it soon intends to borrow an emergency 25 million euros from commercial banks in Albania after failing to issue a 400 million euro-denominated bond because of instability and high interest rates in international markets.
The initiative was announced by the debt director of Finance Ministry, Xhentil Demiraj, who told local media that government would issue a 9-month euro-denominated bond worth 25 million euros.
“All this amount of euro bonds will be paid off as soon as the necessary conditions are created in their international markets for the emission of the Eurobond,” said the debt director.
Interest rates for euro loans of up to 6 and 12 months are at an average of 7.74 percent.
According to the ministry, this loan will not affect the domestic market because the current amount of deposits is far bigger than that of loans.
Data show new euro deposits in the first five months of this year reached 250 million euros while loans are estimated at 100 million euros.
However, lending standards continued to be tightened both for individuals and businesses. Only corporations have had their lending standards eased during the first months of this year, according to the central bank.
Albania was expected to issue the Eurobond 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%.
