Albania issues €650mn Eurobond with 3.65% coupon

Albania issues €650mn Eurobond with 3.65% coupon
By Valentina Dimitrievska in Skopje June 10, 2020

Albania has issued a seven-year Eurobond worth €650mn, with a coupon rate of 3.65%.

There has been a series of international bond issues from both Central and Southeast Europe recently, as governments across the region turned to the international capital markets to raise money to meet the gap between increased costs and lower revenues as a result of the coronavirus (COVID-19) pandemic.

The news of Tirana’s latest issue came after the Albanian parliament on June 4 endorsed plans for a €650mn Eurobond issue aimed at refinancing previous debts and covering the government's financial needs. Albania is rated B+ by Standard & Poor’s rating agency and B1 by Moody’s.

Prime Minister Edi Rama hinted that the Eurobond was issued, saying in a tweet on June 9 that the country achieved a “spectacular result” on the international market.

News provider Monitor cited unofficial sources saying that the interest of investors was huge, amounting to around €3.2bn.

“Not only the Albanian government was able to tighten pricing by 50bp (IPT yield 4.125%) but it also managed to boost the size by additional 100 mn. With order books closing in excess of €3bn we regard the issue as very successful, with overall positive impact for broader CEE market as more sovereigns are planning to sell Eurobonds this year,” wrote Raiffeisen analysts on June 10. 

“We compare Albania to Montenegro and [North] Macedonia with the former offering a 40bp premium to new Albania, while the latter trades 57bp tighter vs Albania on stronger fundamentals. In this regard we find new Albania issue fairly priced to rating and vs CEE peers.”

The rate is considered very favourable by Albanian experts, because North Macedonia, which has a BB + rating, received higher interest (3.675%) when it issued its Eurobond two weeks ago, according to Monitor.

Local analysts say that what has helped Albania in this case has been the perfect programming of the time to enter the international market, when liquidity is high. The advisory banks were credited for picking the optimal timing.

This is the fourth time Albania has tapped the pockets of global investors. The previous Eurobond issue with maturity of seven years was in 2018, when the government borrowed €500mn with a coupon rate of 3.5%.

 

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