Albania starts to repay old Eurobond, no sign of new issue

By bne IntelliNews November 4, 2015

Albania has started to repay its old €300mn Eurobond, which matures on November 4, using a loan taken from Deutsche Bank, with no signs of a new Eurobond issue, business news outlet Monitor reported.

The finance ministry intended to issue a new Eurobond to refinance the old one, but then stepped back from the plan and instead used Deutsche Bank’s loan of €250mn to cover the repayment. The reminder of €50mn will be covered from the internal market.

The new Eurobond was initially planned to be issued in June, but the Greek crisis delayed the plans.

The funds for the repayment are secured and are not related to the new planned Eurobond, which, in turn, depends on the market conditions, Monitor reported on November 3, quoting deputy finance minister Erjon Luci. 

The 10-year loan from Deutsche Bank, received earlier this year, bears an interest rate of 2%. The loan was initially intended to reduce pressures on domestic lending and support structural reforms, the article said.

Last week, Monitor learned from confidential sources that conditions on the international market are not favourable for the issue of a new Eurobond due to high interest rate (6.2%-6.3%). However, ministry sources were quoted by Monitor as saying that the plans for a new Eurobond were not abandoned.

In May, Albania's finance ministry selected Deutsche Bank and JP Morgan Chase to manage the issue of a €300mn-€500mn sovereign Eurobond, while the investors meetings were launched at-end September.

Albania sold its first Eurobond in October 2010, raising €300mn with a fixed annual coupon of 7.5%.

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