Macedonia sees no need to issue a new Eurobond issue in 2017, but this may happen if the circumstances on the international money market are extremely favorable, bne IntelliNews has learned from the finance ministry. 

According to central bank data, Macedonia's gross external debt soared by 19.3% y/y to stand at €7.5bn at the end of the third quarter of 2016. The external debt has been constantly rising since 2007, but begin to increase rapidly as of the beginning of 2016. The debt has risen mostly due to the new €450mn Eurobond issue sold in July 2016, the central bank said recently."

“The domestic capital market is very liquid and provides access to inexpensive capital so there is no necessity of issuing Eurobonds to cover the deficit,” the finance ministry said in a statement sent to bne IntelliNews on January 18.

According to the ministry, if market conditions are exceptionally favorable and an issue takes place, the funds will be used for financing liabilities due in 2018.

“We are monitoring the situation on the international market,” it added.

Macedonia is rated at 'BB-' with stable outlook by Standard & Poor's and at 'BB' with negative outlook by Fitch.

In July 2016, Macedonia placed a seven-year €450mn Eurobond to finance the budget gap this and next year. The coupon rate was 5.625%.

However, the issue was marred by controversy as the issue was postponed on July 14, following an objection by a member of the opposition Social Democratic Union of Macedonia (SDSM) party, who questioned the legality of the issue.

The Eurobond sparked a mass protest in the capital of Skopje on July 11, supported by the SDSM, which has criticised the government for its huge borrowing on the local and the international money market. The issue was re-launched several days after the postponement and Macedonia managed to raise only €450mn instead €650 as initially planned.

The finance ministry claimed at the time that the issue was completely legal and made in consultation with the justice ministry.

Macedonia also tapped international markets in November 2015, when it raised €270mn through the sale of a five-year Eurobond at yield of 5.125%. In July 2014, the country also sold €500mn worth of seven-year Eurobonds.