Macedonia issued on January 11 a seven-year €500mn Eurobond with an annual interest rate of 2.75%, the finance ministry said.

This is the sixth Eurobond issue placed so far by Macedonia’s finance ministry with the lowest interest rate so far. For comparison, the interest rates on the previously issued five Eurobonds ranged between 3.975% and 9.875%.

“This is historically the lowest interest rate of the Eurobonds issued so far by the finance ministry, reflecting the extremely high confidence among international investors,” the ministry said in the statement.

The demand of investors for Macedonia’s new Eurobond was high, amounting €3.5bn, or seven times more than the offer.

The Eurobond was sold with a yield of 3%.

The funds will be used to finance the budget deficit in 2018 and to repay all debts.

At the same time, Macedonia for the first time made a buyback of one third of the previous €270mn Eurobond issued in 2015, which will mature in December 2020. The interest rate of the previous issuance was 4.875%, which is significantly higher than the interest rate of the newly issued Eurobond.

The issue was organised by Citigroup, Deutsche Bank and Erste Group, Reuters reported, without providing other details.

Macedonia is rated BB-/stable by S&P and BB/negative by Fitch.

The country's first 10-year issue was placed in 2005 in amount of €150mn and then in 2009 Macedonia sold 3.5-year €175mn. It also tapped international markets in July 2014, when it sold a €500mn seven-year Eurobond. In November 2015, it raised €270mn through the sale of a five-year euro-denominated bond. In July 2016, Macedonia placed a seven-year €450mn Eurobond.

The Macedonian government plans to borrow a total €470mn from local and foreign financial markets to finance the planned budget deficit of 2.7% of the country’s GDP in 2018.

Macedonia’s Finance Minister Dragan Tevdovski said in mid-November that the decision on tapping international markets would be taken if the price of borrowing was low, at around 3%-5%.

According to the latest data, Macedonia's external public debt fell 2.5% q/q to €3.174.bn at end-September and was down 3.4% compared to end-2016.